It's probably been mentioned, but Discworld handles it like this:
1. Everything is magical. In fact, Carrot's sword is notable as being the least magical known object on the Disc.
2. Everything runs on stories
These two things mean Mr Fighter Face can go toe to toe with mad mages and abominations without breaking a sweat.
That's what I call the "Incredibles approach". If everybody is special then nobody is. In a game about Harry Potter, there is no such thing as a balance problem among mages and non-mages, becouse *everybody is a mage*. Just like there is no problem with a player race having vampiric powers if you are playing Vampire and everybody is a vampire.
The problem comes when magic and mundane users play together. Ars Magica acknowledge this imbalance issue, and thus make people to play with different characters, so everybody can play his mage once in a while, while the other players use "mundane companions" meanwhile.
Thing on this: if you make a game where you can be "human", "dwarf" and "elf", and humans and dwarves are basicallly similar in power level, but elves can do anything they want, are completelly inmune to most effects, can have higher level, use a different base attack bonus, and have access to a different subset of skills (like "fly" instead of "jump" and "see invisible" instead of perception") then everybody would claim that this race is unbalanced, that this is unfair. Even 3e players would say so. That's why nobody allow players to play with, say, a dragon, or a Balrog. However, when the unbalance come from some "player template" arbitrarely named "class" instead of some "player template" arbitrarely named "race", then a lot of people do not see a problem with one class being in a completelly different attack mechanic (ie: autohit spells and saving throws instead of BAB), inmunity to most things (like "protection from elements" or "stoneskin") or access to a completelly different subset of "skills" that are completelly better (like "scry" instead of "perception", "invisibility" as "stealth" or "detect thoughts" instead of "sense motive")