Well, on the rules question side of it, Hypersmurf (as usual) knows all. And I do like that 1-charge-per-guess house rule. As you add more splatbooks, the odds get worse and worse. In fact, you don't even need splatbooks for that. What if it was a custom spell? What if it was a metamagicked version of a standard spell? (I'm not sure on that last one)
If your party is really reluctant to shell out 100gp for an Identify, someone could take a level of Psion. The psionic Identify didn't have a component the last time I checked (since Psionics, in general, is componentless). Now you say, "ack, I can't do that! Adding two new base classes to the game NOW?" Well, there's an easier solution: in a magic shop, they find a Dorje (psionic wand) of Identify. Since it's the psionic version it's a lot cheaper, but they'll need someone with Use Magic Device to use it. (Then the debate starts about whether Use Magic Device and Use Psionic Device are interchangeable...)
But really, I think the bigger problem is that it's just such a huge jump from the 1st-level Identify to the higher spells like Legend Lore. It just gets silly; 100gp is too much to pay to identify a dinky item like a Quaal's tree token, but it's dirt cheap for the Staff of Power.
IMC we added a whole series of item-related spells, some from outside sources:
***HOUSE RULE ALERT***
Detect Curse (a simple cantrip that lets you make a caster level check against the caster level of the item; the chances of any one item being cursed are low, but occasionally you'll find one really suspicious item)
Object Reading (see the Psionic version, it's good for knowing who the previous owners were)
Improved Identify (better at picking out "exotic" qualities for weapons and armor, and no component)
Mass Identify (ID one item per round for 1 round per level)
and a high-level version of Arcane Sight that, among other things, gives enough information to identify the individual spells used in each item. Once you know exactly which spells are included, it's an easy Knowledge check to figure out which item it is, as long as it's not some custom item.
So, if you wanted to allow the Wizard to research a 2nd-level version of Identify that did the exact same thing but with no component, it'd probably make everyone happy. Or, add some flavor to it by having the spell just spit out a list of the spells used in the item's construction, which the Wizard then uses a Knowledge check on. Either way, it takes the burden off of you and doesn't cost them any money.