The Birthright setting was such a setting. Magic items were "rarer" but there was still magic around - and in many ways those who could wield it were more powerful.
The BRCS rules (at birthright.net) have been struggling with how to properly capture this game mechanics wise.
I suggest using the variant from Complete Warrior. That is to increase the market value of magic items by 100-200%. (essentially doubling or tripling the cost). What this does is to double or triple the xp, raw material costs and the amount of time necessary to create magic items. IMO this should "force" things into line.
Another method would be to incorporate the sytems of Weapons of Legacy into magic weapons (and possibly armors). Basically having the item's power scale up with the character, but forcing the character to spend "feats" in order to utilize this power.
The BRCS rules (at birthright.net) have been struggling with how to properly capture this game mechanics wise.
I suggest using the variant from Complete Warrior. That is to increase the market value of magic items by 100-200%. (essentially doubling or tripling the cost). What this does is to double or triple the xp, raw material costs and the amount of time necessary to create magic items. IMO this should "force" things into line.
Another method would be to incorporate the sytems of Weapons of Legacy into magic weapons (and possibly armors). Basically having the item's power scale up with the character, but forcing the character to spend "feats" in order to utilize this power.