Well, judging by my 4E play experience I would say you could allow them to choose one spell per level to do all day long. I would not allow them to do above 2nd level though, which will be pretty ugly anyways considering how useful several 1st and 2nd level spells are.
Another balancing aspect of 4E for these spells is that they all require a successful hit, which would equate to a failed save in 1E. So I would also say that any spell cast using this technique allows a save even when their normally is not one. IE Magic Missile, Sleep, etc... So if they select those spells that is the only version they are capable of casting, so it may dissuade them from choosing them in the first place. Not having a save is a pretty sweet thing to give up.
I think Treebore has the major points nailed down well.
I don't have AD&D experience, but I know there were some attempts in 3E to introduce at-will or encounter like abilities. And they never created effects beyond 1st or 2nd level, I think.
So maybe one 1st level spell (with added save, if necessary) as at-will, and one 2nd level spell (with added save, if necessary) as encounter power - once they come available.
Question might be: Do you offer something for non-spellcasters, too?
Basically, the at-will/encounter ability helps out spellcasters at lower levels.
Maybe you add a encounter/daily ability for non-spellcasters at high levels?
Maybe a 7th level Fighter gets an encounter power that lets him attack multiple targets and deal double damage (or 2[W]), and a 10th level Fighter gets a daily power that lets him deal HD x [W] damage?
A 7th level Rogue (or Thief?) gets an encounter power that lets him deal 1/2 HD x [W] damage and at 10th level he gets a daily power that allows him to move and attack multiple targets for 3[W] damage?
[W] standing in for weapon damage, of course.
The benefit of encounters and dailies is that you can spend a game resource to make a decisive attack that can get the party out of trouble and change the course of battle. This is basically all that Wizards do, and nothing Fighters or Rogues can do.