Like Gygax's Greyhawk games, I'm DMing for a large number of relative strangers with a variety of play preferences, attention spans, et al. I thought I'd start a thread to discuss useful and less useful advice as pertains to this style of play.
Cool. Let's discuss.
Making the players work hard, as per 1e PHB - should players be expected to map?
Yes. Designating one or two of the players to keep track of where the PCs are and have been is, to my mind, certianly not making the players "work hard". The characters should have a basic knowledge of their surroundings. Not to mention, it might be a good activity for those with a lower attention span...keep them focused.
That's up to the individual players. I would certainly mention it as something they might want to do. Then each player can decide what/how much they think is relavent to record for their PCs to know/remember.
Know what's in their spellbooks?
Absolutely! That's not the DMs job!
Creating the world, running the game - what bits of advice from the 1e DMG do you find particularly good? What doesn't work?
I think, for a DM's own sanity, one of the best bits of advice for this is to not detail
everywhere/anywhere too far out of region the PCs are in from the start. This leaves the sandbox...sandboxy

and allows you, the DM, to generate additional plot devices (neighboring kingdoms -be they allies or enemies, areas where bandits might have a hideout, where the local dragon lairs, where the legendary treasure of X is hidden, the biggest city, dwarven mines, etc. etc. etc.) as needed.
It also heightens the "exploration" element of the game, which might be useful for keeping players interested and questioning "what's next? what's over that ridge? where's that castle the NPC mentioned?" etc.
Player discipline - perhaps the most controversial part of the Gygaxian style from our commie pinko liberal postmodernist (edit) 2012 perspective. Blue bolts from the heavens? Ethereal mummies? Is there ever value in the Gygaxian approach to punishing 'bad' player behaviour?
I find teleporting in a half dozen ice devils tends to lend some...focus for a distracted, aimlessly rambling, arguing or just plain dragging their heels group.

Ok, so I really only ever did that once...and I was a young DM at the time.
Seriously, I do not think these sorts of "DM fiat punishments" (even if used rarely/reservedly for extreme situations) add to anyone's fun. If the players are complaining about a lack of action or seem bored, sure "DM up" an encounter you hadn't planned or something to take the party by surprise.
But lightning bolts form the sky as a "player punishment", I really don't think it is useful and basically just sows descent and hard feelings toward the DM...which then lends itself to enforcing the "DM vs/against the Players" (not the PC's! The Players!) mode of play which I, personally, do not find enjoyable.
If you really need some kind of "punishment" system in place to keep your players in line, then they simply should not be playing. Repeated bad player behavior, with adequate warnings given, should result in the player getting booted...until they are mature enough to not be "bad" at the table.
Rewards - it's very noticeable running Yggsburgh that, like Keep on the Borderlands, there is a lot of treasure - +5 this, +5 that all over the place (it's written for 4th-9th C&C PCs). I've been typically halving the '+' mods and reducing treasure as I also halve NPC levels. Gygax's advice on 'limited' treasure should be read with this in mind - his default is still a very high reward (& high risk) game by modern standards. How do you feel about treasure placement in a sandbox?
Your system sounds very reasonable. I also tend to keep magic items, while available, pretty much anything over a +3 is some kind of legendary/mythic device or weapon. When finding a +1 shield or a +2 dagger is a big deal...I think you have a great game. The oft commented about around here "making magic items feel magical." That's the kind of game I love.
Is 2,000gp in the ogre cave stingy or excessive?
Woah. Well...at first glance I immediately think 'yes.' But then, I suppose it depends. Has this ogre been lairing there for years and years? Raiding caravans and merchants on the road or repeated terrorizing a local town n' taking their stuff? No, I wouldn't say it was excessive in that case.
If this is just an ogre in one chamber of a dungeon or cave out in the wilderness/middle of nowhere...then...yeah. I'd say it's excessive.
IOW, where's that 2,000 gp coming from? If it makes sense the gre would have it, then great. If it doesn't then cut the treasure back.
Which basically goes to my opinions on "treasure placement" in general. Does it make sense? Should that warren of kobolds have a trove of 200 platinum pieces, 1,500 gp, a staff of the magi and a +4 battle axe? Mmmmm prrrrobably not. But if you can make it make sense in the game setting/world...go for it!
Very rarely do I have treasure resulting from
every encounter. I generally make sure the PCs have/find dribs and drabs, enough to keep themselves going (basic operating costs, if you would- meals, a room at the inn, mounts, if necessary, etc..) and throw in a nice big "pay off" every now and again after a particularly big moment/battle/conclusion or just a complete random surprise (though these are particularly rare and usually entail whatever owned the surprise coming after the party,

.
That said:
1) Unless it's a coin purse on their person or weapons/items they are carrying and using, if you don't encounter a creature in their home/lair you are probably not getting their treasure.
B) If you do catch a creature in the home, you must take into account how intelligent or crafty the creature is. Is there just a piles of coins and gems sitting in the middle of the room? Is there a locked chest in the corner? A secret hiding space behind a shelf or tattered tapestry? Do they bury their treasure under their feet or keep it stuffed in their bedding? Just defeating a creature in their living quarters does not automatically mean you are going to find their cache. [Not wanting to "bog down" the game pace with overly detailed/time-consuming searches, but the hunt for a creature's treasure should allow for some fun for certain of the PCs - thieves, elves, dwarves, etc. all have various "detecting/noticing" special abilities that might give their character a moment to shine.]
And third) just to reiterate what I said before and reinforce its application to 1 & B,

Placement and amount of treasure for any particular encounter should "make sense."
Personally I think I tend to over-stingy and struggle with placing decent treasure, which I think is not good for a sandbox game where you want pro-active PCs. Having a pre-done sandbox with generous treasure helps me, I think.
If it helps you, then by all means use it. Like I said, I think your system for paring back the power of found magic weapons is a good one. So if taking the treasure pre-placed in a module helps you, then adjust as per your system (and makes sense

and go with it.
Have fun and happy "bringin' back ye olde skool" gaming

--SD