What Living Greyhawk does
Well, going way way back to when I was playing Living Greyhawk in July, I took scribe scroll as my initial feat because I wanted to craft scrolls for other players. Later on I found out that players can buy any magic item they can afford in living Greyhawk, and that item creation feats were not allowed. I changed my feat, but I've never played in a campaign where items could be purchased from NPCs except by bartering perhaps. Living Greyhawk did use a "Days" system where a character spent "Days" to travel between their regions for events. I had assumed initially that you could also spend "Days" to craft items. I do not know if Living Greyhawk also negates the use of Craft and Profession skills.
The problem with unregulated and economically regulated trade
If we don't limit what items can be sold for liquid currency and what items can be bought, then people get what they want when they want it. That's fine to me. The only problems are with item creation and craft skills. These features allow you to generate additional income indefinitely unless these are controlled either through an economy or time management.
Even by the standards set in the DMG (though the 3.5 ones could be different) you had a GP value that determined the maximum value of purchasable items. Liquid assets were also listed (10% of the GP value of the city, IIRC), which determined how much equipment could be sold for liquid assets in a city. What the rules didn't include was a "how often is this value recycled". If a group were to buy half the liquid assets of a city (all that could really be purchased before it would prevent the regular economy from functioning), how long does it take before trade and commerce would reaccumulate enough new liquid assets to accomodate this exchange?
If you allow PCs to sell created and plundered magic items to NPCs with the above partial regulation, then having a gold supply for each major city (those with taverns), after a gold supply is run to it's bare minimum, people would either move on or try and sell everything they possibly can to that city as soon as they can. Too many PCs in a single region would quickly deplete that regions resources if allowed to do so without regulation.
Solutions
The quick fix, the Living Greyhawk fix, is to just cut out item creation. I don't think this is a solution that anyone really wants, except as an easy way out.
In general you could regulate time and not economy, or you could regulate time and economy simultaneously. The problem is, how do you relate adventuring time with non-adventuring time? How are the two measured in relations with each other, and how do they relate with real time. Smaller increments or larger increments of real time?
Smaller increments are probably a safer bet. They are easier to examine. A simple small increment regulation would be to give x game days for each real month that any character can use. Now I wonder if we should have seperate scales for each day while on an adventure vs. not adventuring. Obviously characters can only create items while on an adventure if the adventure permits this, so items can normally only be created during a characters downtime.
If we use the sample that for each month of real time, a character can spend 10 game days on item creation if they are not adventuring, then we can look at how this fits into the world. For every 3 days of real time, the character has 1 day of character item creation time to spend. When an adventure ends, they can spend 3 days of time in between an adventure to create one magic item of 1000 gp value or less, but the craft skills and profession skills aren't really useful. You could make 1 day of magic item creation and 1 week of crafting the same to try and make the two work more succesfully in unison.
If we just give every character (regardless of current activities) 14 days of item creation for every month and remove the rule that item creation must be continuous, then we can craft items over the course of multiple adventures if we want.
These are both ignoring any concept of economy. If we want to toss that in, it adds that one extra layer of safety to the game system, but adds that extra complexity.
Anyway, that's my general analysis. I can do this, but which way do people prefer we go with? I'm fond of the real time system more than the arbitrary x days per month system, but in order to make that work you have to alter the way craft/profession works, or alter the time mechanic for craft/profession use.
