reanjr, you mustn't have noticed what I said about two sentences later in that same paragraph, as I said that you may allow Intelligence mod to apply with damage; crossbows don't add Strength mod to damage, but I figured that a magical effect might add some damage bonus for a potent mind. Strength definately shouldn't apply unless the caster is actually pulling their arm back and throwing the bolt/projectile/whatever. Also, the reason Magestrike shouldn't be a melee attack is the following, which I will repeat yet again for clarity: ONLY CRAZY-IDIOT WIZARDS EVER LET THEMSELVES GET INTO MELEE FOR MORE THAN 1 OR 2 ROUNDS PER BATTLE. Not insulting or being rude, but stating the truth about mages: no one with 15+ Intelligence and d4 hit dice is ever going into melee unless they're psychotic fools with 5- Wisdom and a death wish, or they have something like Vampiric Touch cast in order to leech life from their melee-foes without being slaughtered in 1 round by that same foe, who is likely wielding a longsword or greatsword or any number of other pointy implements a great deal more devastating than a d4-hit-die mage is ever going to survive against for more than a round or two. Mages are too smart to go into melee otherwise, because they know they're pansies with low Armor Class and even lower hit points.
Naathaz, maybe you're not too familiar with the 3E rules, but if you give mages the ability to fling mystic *somethings*, whether or not they're physical attacks, that ability has to belong to a general type; extraordinary, spell-like, or supernatural. And extraordinary abilities are nonmagical, so that option's not really valid. Spell-like and Supernatural abilities are subject to Spell Resistance and Antimagic Fields, because they're magical in nature and the two aforementioned effects apply against ALL magical stuff, to my knowledge. Likewise, for instance, Golems in the core rules are immune to all magical effects except for the particular ones their descriptions specify. (as a note, I really hate how 3E changed Magic Resistance to be called Spell Resistance, because it still applies against more than just spells, and I don't like the term Spell-Like Abilities either because of its false connotations, though I don't know of a better name for it....)
I understood your general idea from the start, my post was mostly just a clarification and compilation of sorts, but with me also pointing out the specific factors your idea dealt with. Though ammo is generally negligable in cost and weight, as is a crossbow itself, there is still the matter of carrying it around, drawing the weapon and reloading, and potentially running out of ammo, and of course there's extra costs if you use magic-enhanced crossbows or ammo like +3 bolts of shocking burst. This brings up another thing though; do you want the mage's Magestrike/Magebolt ability or whatever to count as having any sort of special qualities for purposes of bypassing Damage Reduction or whatnot? Will it be considered mundane for those purposes, or will it have some effective enhancement bonus or count effectively as a magic/adamantine/lawful/holy/etc. weapon? (depending on whether you use 3.0 or 3.5 rules) That's something that may come up during play, so you may want to decide beforehand.
As for mages then neglecting the damage-inflicting 0-level and 1st-level spells, it really is a valid concern. Why bother with Ray of Frost or Shocking Grasp when you can deal 1d8 damage with a Magestrike? Oh, sure, Magestrike isn't a touch attack like the others, but it's still more damaging. Dealing out energy damage isn't much of an advantage over dealing physical damage, so it's not often that Ray of Frost, Shocking Grasp, and such would be used, since there aren't many situations in which they would be any better than the Magestrike. Thus it's less likely that mages would bother learning those spells, and would instead prefer to learn other low-level spells. Mages would only sometimes bother to learn such spells, and then only for the sake of harming creatures that have low Touch AC but higher AC otherwise.
Ogres and such will be easy enough targets for a Magestrike, whereas a caster might bother learning one or two melee/ranged touch spells when they need to fight Chuuls or Dragons (which won't happen until they're already flinging around Lightning Bolts and Flame Arrows and Vampiric Touches and whatnot).