No, Falarn only sells magic items and spell components. He won't sell materials for his competition.
Also, note that your spells known and caster level are kind of limited. You can't make magic weapons or armor beyond a +3 enhancement (nor some other items of higher bonuses, such as Rings of Protection, Belts of Giant Strength, Bracers of Armor, etc.), nor with special abilities that are equivalent to a higher than +3 enhancement, and don't know a ton of arcane spells. And you'll never qualify for Craft Staff or Forge Ring, as your Chameleon caster level never exceeds 10. So while yes, it is a very useful class feature (the Chameleon's daily-changeable bonus feat), it does have some limits. Read the magic item creation rules in the DMG/SRD if you don't know what I'm talking about.
(EDIT: Based on my houserule for the Chameleon in T13K, as I missed its double caster level rule; for T13K, the Chameleon PRC has a caster level equal to its level in the class, not double its level in the class.)
Kralic, you can get a Bag of Holding from Marusk if you want, paying cash/gems for it. Marusk doesn't have any more Portable Holes right now, nor any more phase spider silk for crafting them right now (Szitha bought the last of it from him before).
Dragonwriter, I'd say each bowstring costs 1 silver piece. Let me know what your Cloak and Buckler have for their current bonuses before the upgrades. However, you'll probably have magic-loot-trade-value remaining after the swaps and upgrades, and Falarn won't pay the same in coinage as he will give in trade; any excess value left in magic-item-trades will only get about 70% as much gold from Falarn, i.e. he's less eager to give you money to spend at competitors' shops than he is to just trade magic items directly for other ones.
You can convert the remainder of Fahlias' loot share to numerous 100-gp gems from Gil's shop, and if you have enough left over, you can spend it on however much diamond dust you need for a Raise Dead or Resurrection.