Yes, something different for the dancing.
I think the dancing itself should negate XP costs and maybe even expensive material components. They have to dance a long time, you know.
EDIT: but perhaps first we need to settle on the reduced manifester level. What about ML 3 instead of 5?
If we're going to stick to 4th level spells for standard ones, we'd better cut the casting time requirements way back. I think I like incantations better in some ways, but that's partly because I also like innate manifestation.
Ok, given your max CL formula and max spell level is the same of a wiz for that caster level; max CL = 20, then I'm ok.
I think spells changed too much going to 3.x to stick to that formula, which is also a bit confusing. Let's just stick to the proposed CL=# of critters (up to some variation to speed casting time) and allow spell levels up to that a wiz of said CL can cast.