If the design's purpose is to remove the need for magic items, then logic suggests that the heroes will have to be more effective in other ways. I'd like to see a D&D character, with appropriate magical gear, stacked up against an IH character with no magical gear and see how the numbers compare.
If nothing else it should make for a very different "flavor" of D&D. In particular, the stunt system should be very helpful. It appears to be set up so it's kind of generic, and the DM has ultimate say as to how it works (which skill check will be used, essentially), but it encourages the player to a) pay attention to surroundings and circumstances, and b) describe clearly what he's going to try to do. I think that will lead to players describing their combat maneuvers more frequently, and that's always a good thing in a role-playing game.