There are limits to what can be done using these sorts of techniques.
First, the amount of time required to craft items is measured in days, not years. The PCs having no days off ever is as unverisimilitudinous as the world never moving on.
I'd rather a GM simply denied item crafting than allowed the players to waste feat slots on abilities the GM will render useless. However, if the Wizard can craft items, and has reasonable down time, he can craft them for the group as a whole, not for himself only. He's part of a team. How long does the Wizard last without other party members between him and the enemy?
Second, most D&D campaigns are set up so that the players can take their PCs on adventures. So if the GM shuts down one set of adventures due to the passage of ingame time (the bad guys move on, the dungeon reinforces itself to become impenetrable), how is the campaign going to progress? The GM will have to prepare another set of adventures, in which the players of the casters then get the benefit of their prepration.
A lot of this comes down to the social contract. In my games, at least, characters think like living beings. "One encounter, then rest for 23 hours, 55 minutes" is not the usual human approach. So, if the GM refuses to allow the 5 minute work day - there are time pressures, the hostage gets sacrificed and the Dark One summoned, the bad guys move on, the bad guys reinforce their position, a more proactive adventuring group gets the job done while these "heroes" are in hiding - this throws the question back on the players.
If the characters are not going to act on time sensitive issues in a timely manner, how is the campaign going to progress? It's not the GM acting in a vacuum that prevents the game progressing. It's the players' insistence on a five minute work day that prevents the game from progressing. The five minute work day exists only if the players and GM allow it to exist. Most game problems are best resolved by out of game agreement as to how the game is desired to play out.
But if the fellows climbing down the rope have had their 8 hours of rest, then they'll be coming down under cover of Protection from Normal Missiles, Mage Armour, Stoneskin etc. And as per my previous paragraph, this won't be a disadvantage for the players - they get to play out an encounter which their PCs probably win! Which is, for many, a big part of the point of playing the game.
And the villains now have the option of retreat. So what do the PC's do now? Wait for their defensive magics to drop off, and risk an ambush by the enemy, or retreat back up the rope? Maybe an enemy spellcaster Summons a strong creature who yanks the rope out of the spell - now we have a character or two on the ground, and a couple in that extradimensional space.
I'd also suggest the enemy consider Dispel Magic, but then it would have been as easy or easier to cast it shortly after locating the Rope Trick area.
In the 23 hours and 55 minutes the PC's are hiding in their rope trick, how many preparations can the enemy make around their space in the real world? The players are asserting that it's "only rational" for the characters to hole up and replenish their resources. Isn't it equally rational for the enemy to bolster their defenses and prepare an ambush, or move their plans along, or otherwise take steps similar to those the PC's would take if they were on the other side of the equation?
By the way, where do you leave your Handy Haversack, bag of holding, etc. while in the Rope Trick space? The spell description says bringing one extradimensional space into another is hazardous.
1> Magic shops / the Economy : Just because an item has a price, doesn't mean a player can buy it whenever they want. Magic shops should pretty much not exist, and even if the setting calls for them, it should put limits on powerful items. And the D&D economy just simply cannot be used as a "rule". The DM must override it when necessary because it makes absolutely 0 sense from peasants and meals all the way up through artifacts. Which means you also have to consider...
However, if we remove the magic shop, then we effectively add to the power of the Crafting spellcasters. The noncasters can't get items to make them more versatile without that magical economy.
2> Crafting : I personally don't "get" people who like to play crafters. And I have never seen anything other than scribe scroll used in game. BUT I acknowledge its could be a problem in the rules as written IF you give PCs unlimited time for crafting. If players have crafting feats, then the DM has to be careful about how much time he allows and what effects spending that time to craft has on the game world.
To me, the real limitation is available wealth. Crafting allows the characters to swap items more economically (we only get half value in sale, but we only pay half price to craft). At the extreme, it doubles the available wealth since gold can be converted into twice as many items. That extreme relies on having every crafting feat, and all prereq spells, available, and never getting an item the crafter can't take 10 on. And the crafters with crafting feats gave up on other feats they could have taken for greater effectiveness in another area.
3> Not building characters from the ground up: This is something I always bring up when people complain about Rope Trick. When building a character from 1st level, no wizard would ever take Rope Trick. You want other more useful spells at low level, and by the time you get to higher levels there are better spells to choose from. When characters get created at high levels all sorts of wonky stuff happens that would not have happened in normal play.
I find most spellcasters will buy a few scrolls. I've never needed every possible spell in my spellbook, but enhancing the 4 spells per spell level I'll get advancing with some scrolls for added versatility is a given. I rarely find my characters cast spells from scrolls, though. What I do find is that, at 5th or 7th level, I stop using L1/2 spells for offense and start getting longer-lasting enhancement spells and/or more situational use spells for those slots.
4> Control over treasure including spells: A wizard only gets to choose 2 of their own spells per level, if there is a spell a DM doesn't like or is part of a busted combo.. If the player doesn't select it as one of his 2 choices..the DM needs to make sure enemy casters don't have it in their spellbooks or leave scrolls of it lying around.
If there is a broken combo, why do only the PC's use it? It's amazing how easy it is for the group to decide to ban or modify a broken ability when the enemy uses it against the PC's as well as the PC's using it against their enemies.
5> Two hands. You have two hands. : I see a lot of players talking about having potions, scrolls, wands etc for every occasion. And somehow they're always available when needed. NO. You get an item for your left hand/sheathe, an item for your right hand/sheathe, an item strapped to your back, 2 or 3 items attached to your belt or lower leg etc, And MAYBE a fancy bandolier thing that can hold a few items. Everything else is in your backpack, good luck searching through it in the middle of combat. Or going back to your pack mule. BUT all the "exposed" items need to remember...
That's a big one. Even for the Haversack guy, using up a move action every round to get that item, and your standard action to use it, becomes tougher if the combat moves around.
Trimmed a few items I had no comments on
9> five minute workday: Can't be allowed regularly. Other players have to police it. DM's have to police it. Attempting a mission but stop to rest and recover spells? Sorry, now the hostage is dead, the trail's gone cold, the ritual is complete and the bigger evil is here, reinforcements have come, etc etc. Sure, there are times where it is a good idea, and times when PCs can get away with it with no negative effects. But the PCs should not always be able to determine exactly when its safe and when its not.
What stops the enemy from surrounding the area with archers while infantry digs a pit under the rope trick area and fills it with spears, or builds a bonfire they will light when that rope drops down? Some years back (well before 3e), I recall a player persuading his teammates they needed to bed down - right here, right now - because they were short on resources. A second player didn't like the idea, but threw his hands in the air in the debate. So they bedded down. And, in the middle of the night, they were attacked by a contingent of giants.
The "bed down" player was very upset. The other fellow said "Seriously? This is like breaking into a house, packing up all the valuables on the second floor in a sack, going down the stairs and taking a nap on the couch. What did you EXPECT would happen?" Rope Trick provides a bit of an advantage, but nowhere near insurmountable to intelligent foes.
11> DMs are too nice to casters : I'll throw in the loss of spell drawbacks here. If haste aged players, it wouldn't be cast constantly. But for the most part, the general feeling of the player base is that if the DM steals spellbooks, or has all the bad guys target the wizard, or constantly has enemies use counterspells or ready to attack the caster, or has big bads who scry and attack party weaknesses, or use tremorsense against invisibles or flying minions against flyers, or anything else that specifically screws with players - the DM is a bad, lazy DM who is playing to "win" instead of telling a story. And this community think has infected DMs who have mostly become too scared to play hardball.
Again, if that spell is so effective then enemy casters will reasonably use it too. If the players consistently use scry & fry tactics, why doesn't that Lich do the same?
13> And most importantly, a wizard can't do EVERYTHING. If the wizard has a bunch of 5 minute workday workarounds like teleport x2 or rope trick or whatever, or if he has a bunch of defensive spells like invisibility, fly, stoneskin, etc or he has a bunch of utility spells to shame other party members... he can't also have an unlimited amount of offensive spells that exploit every possible enemy weakness.
And when the party is actually working as a team, my experience is that the team is OK with each party member having some power. That makes the team more powerful.