Our DM lets us use a mix. If its an AU spell, its in..if it is a 3.5 spell I want to use, he classifies it as simple, complex, exotic or not in. If it is a 3.5 spell and there is a duplicate AU spell, I have to use the AU version. There have only been a few spells I've really felt I needed from the PHB, so it seems to work out anyway.
While the spell selection does lack some power overall, it makes up for it in sheer versatility. And I can't stress enough, Sorcerous Blast (thats the equal of fireball, only you can substitute various elements) and Gird the Warrior (5th level, +10 AC, +4 to hit and damage on someone). Modify spells and later quicken.
I could get by without the PHB spells, now...but not at first I couldn't...takes a little while to get familiar how the system works.
We have a sorcerer in our group and he seems ok with the number of spells I can cast. Though he is a bit jealous over the fact I have a wider selection then he does.
Here's a cool level 6 spell: Shape Spike. 120 foot line of fire that I can shoot out in a line..and I can shape it so the line avoids allies and goes around corners. I can double it back on itself to force people to have to make 2 saves vs. damage (but they don't take damage more then 1 time). Maxs out at like 15d4 I believe...but if you have the Energy Mage (Fire) you can add +2d6 to that. Everyone in the group thought that was awesome.
My biggest complaint is there is not really any good prestige classes for the Magister and that they don't get the lesser and greater aspects of power earlier (our DM decided to let me take a few more early, since they are flavorful without being too unbalancing).
No spellbooks rock, but don't lose your staff hehe.
We have no witches, but I could see you using the druid list from the phb if there was something there the AU list didn't cover.
Overall I think you'll be fine...the power level isn't THAT much lower, unless you DM live really high powered campaigns, it shouldn't be an issue.