Thanks for the review, Philip.
To answer your question about the masterwork components, if you're the GM, I can't honestly say you're missing anything by not including them in your game.
However, if you have dwarf players in your game, it would be nice to give them something to do with their Craft skill. Do your players avoid having a high Craft skill? I think it's a shame that a dwarf PC would invest his skill points in anything else, especially since there are so few fighter skills that really make a lot of sense for dwarves. Swim? Ride? Jump? (A notable scene from LOTR notwithstanding!)
The rules certainly won't break your game, since it is generally the GM that controls how much down-time the PCs have, and masterwork crafting takes a long, long time. Even so, it gives the player something to look forward to, banging away on his custom breastplate for a few weeks at a time when he can spare it. Come the day that the breastplate is finished, the player can be every bit as proud as the wizard who has researched a new spell, the bard who finishes his magnum opus, etc.
Wulf