You're missing a very obvious point in your calculations, Sylrae. Your XP cost is fixed, but XP requirements scale with each level. Doing it your way means that by 190,000xp (level 20), an LA +2 race will be only 3,000xp from 20th anyway--and at that level that's the difference of only 1 or maybe 2 encounters. So, one encounter later, your LA +2 races are 20th level along with the LA +0 races that are still 20th level. This isn't so bad, but the real burden with this idea and the regular LA rules, is that low level LA race characters are more vulnerable than their non-LA race allies.
Your method penalizes LA races at the worst possible levels, the first two or three! A Drow 1st lvl wizard (to use your example) may be the equivalent of a 3rd level character, but he's not going to be able to handle an encounter for a 3rd level character. One good hit, or even a bad one, and he goes down! His SR may help, but his saves, AC and BAB are also going to be lower than what they need to be for the character to have even a fair chance to survive.
This also burdens other PCs with the duty of watching over the character until he is tough enough to hold his own, which he won't be until around 5th or 6th level. And this 'babying' phase is going to last longer if he wants to spend XP to make magic items or cast certain spells.
XA Table.xls
This links to a table I've been working on for LA. Instead of LA (Level Adjustment), I've renamed it XA (eXperience Adjustment) since I'm adjusting the XP and not exactly the levels. LA = XA. The table lists the XP required for each level for an XA +0 race. To the right of that is a progression showing that XP amount being added to a fraction of the needed amount to come up with the XP required for an XA +1 race to level, up to XA +4 races.
Example: XP to get to level 2 is 1,000. For an XA +1 race, 1/4 of that is added to the amount needed; 1,250xp to advance to 2nd level. At 5th level, the fraction is reduced to 1/8 (needing only 11,250 instead of 10,000 to go to 5th level), and by 6th it is eliminated, so that from 6th on, the XA +1 race character needs the same XP as any XA +0 race to advance.
For XA +2 races, they advance normally at 8th, 10th level for XA +3 races and 12th for XA +4 races; until then, they advance at a slower rate.
LA +0 races level up first, of course, but the other races will level up within a matter of a few encounters (I think maybe 1 extra encounter per +1 of the race's XA) after the XA +0 race levels. By 12th on, all XA +4 and below races will advance at the same rate. There is no 'baby' phase or having to be watched over by fellow PCs because at nearly the same time, the characters will be the same levels.
This table factors in the difference in power at lower levels, lower XA races will advance faster to mitigate the superior racial abiliies of higher XA races. But after a certain point, all XA races pass the same learning curve and advance together. It is at this point that XA racial abilities begin to make less of a difference in play and while a 10th level Drow fighter may have a few advantages due his race, he'll be roughly on par with a Human fighter of the same level.
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