That resembles the solution I used in my last (D&D) game. It doesn't really work so well, though; VoP skews class balance a lot and doesn't actually reduce reliance on buffs by much, since you can still apply a lot of buff spells to a VoP character.
Okay, so I thought about this a little more, and I think I might have a more refined iteration of what I dashed off above. I'm going to add it here and edit the first post to save space.
D&D magical item or spell buffs confer roughly the following upon PCs by 20th level :
+5 enhancement bonus to attack and damage(weapon)
+10 bonus (typically enhancement/deflection) to AC
+5 resistance bonus to saves
+6 enhancement bonus to most important stat, +4 enhancement bonus to second most important, +2 enhancement bonus to third
A variety of skill boosts in the +10 range
Ability to overcome DR
Spell resistance (possibly)
Flight
[Other posters, please add to the list above as you think of stuff!]
So here's what I would do:
1) Use IH stunts, challenges, and zones. These can help make up for some of the non-numerical benefits conferred by item and spell buffs.
2) Use IH skill and feat rules. These make up for the lack of skill-boosting items and the lack of ability to overcome DR and generate various damaging or incapacitating magical effects by using stuff like vorpal weapons or iron bands of Bilarro.
3) Increase BAB for all classes by one category. This makes up for the lack of attack/damage bonuses.
4) Use class defense bonuses and armor as DR. Make armor DR a flat x/-. IMHO, it should have been written like this in the first place, but in any case, in a D&D game that may feature magical weapons (or, worse still, the magic weapon spell), being able to just ignore armor DR with a simple spell or weapon sucks.
Class defense bonus should probably look like this:
Barbarian: Poor
Bard: Medium
Cleric: Poor
Druid: Medium
Fighter: Poor (possibly medium)
Monk: Good
Paladin: Poor
Ranger: Medium
Rogue: Medium
Sorcerer: Poor
Wizard: Poor
5) Use IH saves (+1/level), unless the idea of good and poor saves is more appealing to you. In the latter event, I suggest just giving PCs a bonus to all saves equal to +1/3 level. That gets you save bonuses of, say, +18 Fort/+12 Ref/+12 Will for a 20th-level fighter, which I think is pretty fair once you factor in Iron Will and stat bonuses.
6) Grant more stat increases. I'd suggest 1/3 levels (instead of 1/4, like at present) and +1 to all stats every 5 levels a la Conan.
7) +2 skill points per level for all classes, and perhaps use the IH skill groups as follows:
Barbarian: Athletics
Bard: Academia, Social, Theatrics, and any one other
Cleric: Academia, Mysticism
Druid: Athletics, Wilderness Lore
Fighter: Athletics
Monk: Agility, Athletics, Perception, Stealth
Paladin: Athletics
Ranger: Athletics, Perception, Stealth, Wilderness Lore
Rogue: Agility, Athletics, Robbery, Social, Stealth, and Theatrics
Sorcerer: Mysticism
Wizard: Academia, Mysticism
8) Maybe more feats. I'm not sure about this one, to be honest; if you provide IH feat masteries, you'll have plenty powerful classes even with just one feat every 3 levels. If you do grant more feats, I'd give something like a bonus feat every 4 or 5 levels in the class's highest granted mastery.
9) Take out all the numerical buffs and the buff items, including skill bonus items. Even better, limit the number of beneficial spell effects a character can have in place at one time. If you want magical weapons or armor, don't give them "pluses"; just give them special properties. There's nothing written in stone to say that +0 flaming shocking burst weapons won't work in a game.