Looking at the 3.0, I think you are on the right tack, but there's more to be done.
The first principle is to figure out the bare minimum of power that will produce the feel you're looking for. The fluffy part you discarded at the beginign is actually pretty important. It tells the reader where you are going, and can do a lot to help the writer clarify his goals.
Note: Wizard-linked prestige classes are hard, because wizards don't have a lot to trade away... Be preared for a number of iterations.
You've got minimum skills/skill points - good.
Only 1 good save - good.
Reduced spell casting rate - good.
I'd keep the hit die low (like d6). If they want good HP, they should have takeing some levels as a fight-y type.
Restrictions don't necassarily balance power - class entry requirements just limit the options you have when working your way towards the class. The Combat casting looks good. Still spell sounds like a good fit. To nail down the "sword" part of sword mage, I'd probably consider adding~
Feats: Weapon Focus (medium or larger slashing weapon)
It's important to establish flavor right off the bat. Canny defense at first level is eminently cherry pick-able (I'd take one level in theis class, grab that special ability and move on- and not look like a sword mage at all.
Would move canny defense to at least 3rd level, and introduce something that very specifically refects the sword mage's shtick- and is mostly cool points rather than power. Ignoring having you Weapon Focus weapon ready/in hand while spell castig seems really good ot me- It causes a penalty to go away rather than granting a bonus, and helps you look cool: "I've got a sword and I'm casting!"
I'd also give real thought to having this class ban one or more schools for the character. Maybe you can no longer do divination or maind-influenceing spells. The one thing wizards have going for them is their huge range of knowable spells. Cut into that and you might be able to get more casting levels.
I'd look at spontaneously casting certain fitting spells as abilites gained at various levels. Maybe at 2nd level that may convert a memorized spell of 2nd levle or higher into a Minor Magic Weapon, and at 6th level they can convert a memorized spell of 4th level or higher into Magic Weapon or something similar.
This two idea taken together will let you hem in their magic, but mostly by making them focus on spells that make sense, and then let them look reasonably versitile, while always having access to a couple of their favorites.
Keep at it, There's some potential here
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that you can trow at gamecat and shadowrun man, TheFlamingRheo ect. go and check it out and I can give you things to help you out in D&D to make you up to my level (or at least move in that way
