The math behind them works as for not using the big 3 magic items. You may want to consider free Expertise feats and possibly free paragon/epic defense feats or lower the defenses of monsters by 1 per tier and possibly do something about their NAD attacks. And possibly allow some extra damage on criticals (1d6 per 5 levels). You also still need to hand out masterwork armor, or just let the players upgrade for free when they hit the right level.
The extra damage for crits is a good point. Not sure about lowering monster defences.

(Dungeons & Dragons)
Rulebook featuring "high magic" options, including a host of new spells.