PC's as Crafters
I kind of agree with Spatzimaus on this one. PC's can make great crafters depending on the game you play in. If your party hops from one dungeon to the next with little care for or interest in downtime, then playing a crafter is a huge waste of feats, skill points, and prestige classes. One of the best features of 3.0/3.5 is the ability to make the magic items you want. Our group has always done random magic item treasure from the DMG tables. How often to you actually roll up the +2 shocking burst dwarven ugrosh? One in 1000?? So you have to have it made. If I pay someone to make it for me it costs full market value, or really close to it. If someone in the party makes it for me it cost half of that, allowing you to stretch your gold much farther. Currently I play a dwarven cleric of Korak (Green Ronin Book of the Righteous) who just entered the artificer PrC from the book. I was just able to equip my group with armor upgrades (mithril shirts and adamantine plate) and basic magic weapons (+1 or better) at a greatly reduced cost. We still farm out the items I cannot make, but there will be less need of that as I advance. Also, we have adopted a variant rule for using unusual materials for crafting. Having a crafter in the group is a good thing as long as you take downtime to maximize their usefulness.
The masterwork component as a separate piece of the work seems odd but workable. To me the masterwork component represents the extra time and care needed to make sure the work is done correctly and precisely, thus yielding the +1 attack bonus or reduction of check penalty. Is a flat value the best way to go? Probably not. I would use 100 gp for simple, 200 gp for martial, and 300 gp for exotic. And 100/200/300 for light/med/heavy armors too. Nice, neat, complete. Remember however, that just because armor is lighter, doesn't mean it is easier to make. Same with weapons.
I forgot to mention the way I built my crafter. Dwarven Cleric of Korak, by which I gained access to the Forge Domain (GR/BotR). The first granted ability is a +4 bonus to craft checks involving the forging and crafting of items. Later, as my 5th level domain spell I get Fabricate. Look out when that happens. I'm 7th lvl with max skill ranks (+10), dwarven (+2 crafting metal), MW tools (+2), Forge Domain (+4), and Int bonus (+2). At 7th level I have a +20 modifier, plus I can hire an appretice or two in town at a fair price to boost that up some. A spell like hammer chant (Hammer and Helm, Green Ronin) boost my speed at crafting and there are a few feats that boost mundane and magical crafting speed. It is all about desire. I always play clerics, usually dwarven clerics, almost always focused on combat. My Chr was poor so I went crafting instead. It is not as rewarding as it could be in combat, but when I watched my rogues keen rapier do its critical, critical, critical routine last sunday I got all warm and fuzzy inside. Item creation is about house rules and making a system that works for everyone. Work it out as a group and you will see how rewarding it can be.
Thorimar