So, an attempt to sketch out "power sources"s that replace magic items.These are really cool ideas! I really like the idea of tying milestone leveling into something tied to the campaign setting.
Power Source: A power source has a level. Your PC level cannot exceed your total power source level.
Each power source takes an attunement slot. Some power sources have physical incarnations as an object, like magic items. Others don't.
When you gain a new power source, you are limited to 3 in total (attunement limit). You can cannibalize a power source to add 1 to an existing power source level. (goal: replace magic item as part of character build complexity, limit "I am a rainbow" ness).
Most power sources offer benefits, like a magic item does, when attuned. These benefits scale with the power source level "in use" (ie, a level 10 power source with a level 3 PC doesn't grant level 10 benefits). Need a word for that.
As an example, red dragon blood might grant stuff like:
Resistance to fire (maybe immunity when high enough, or even resistance to cold), Unarmored AC equal to (proficiency bonus)+(con bonus), flametongue weapon, flight (limited or not), fire breath, increased strength, increased size.
You could just take some magic item (like a rod of the pact keeper) and have it level up. Such magic items might tend to grant "summon to hand" as a relatively early benefit.
Gaining power sources, and leveling them up, becomes a carrot the DM hangs in front of the PCs. And controls advancement.
And when you introduce a level 10 PC, the power sources they have tell a story about WHY they are so powerful.