XP to craft was based on the idea that being able to make your own magic items, even consumables, increases your power. XP already increases your power, by giving you levels, so this way there's a "tax" on other ways to gain power. I first ran into this years ago in an online RPG; to purchase a weapon or armor for my character, I had to pay XP. I balked at it, but it does make sense, if the weapon or armor makes me stronger than I was before.
Money is a terrible balance point for such things because there's lots of ways to acquire more money if you want it, unless the game master steps in and somehow prevents you from doing so.
(Un)fortunately (depending on one's point of view), in 3.X, experience points are a river. If you fall behind on xp to the point that your companions are higher level than you are, you earn more xp from encounters. If you spent that xp on magic items to boost your power, you can be just as strong as a higher level character (or stronger!) but be earning more xp from encounters, because the xp system never takes your gear into account; if you're overgeared and encounters are cakewalks, I know 3.X had a note for DM's to give out half xp for encounters that are too easy (and +50% I believe for encounters that are harder than they seem on paper), but if encounters are easy, then you can face more of them and be faster and more efficient about the process...or the DM starts using more powerful baddies, at which point you earn more xp anyways...
You know what, I'll just put "the experience point system in general" as something that doesn't match the fiction.