To be honest, if you're cutting both levels and money rewards by a fraction, then magic item costs for XP or money really won't be any costlier; you're still only gaining magic items at the rate they would go up in level, anyway. You're levelling and collecting loot in the same fashion, only at half speed.
One thing to note about the XP charts, Reynard -- levels 1 through 3 are faster than the rest of the levels 4 through 20. This was on purpose, to allow players to get to 3rd quicker and leave the more vulnerable levels behind. If your group levelled 1 through 4 (you didn't mention which levels), then that's the quickest they'll ever level up in 3.5 as-is.
One thing I've often found in playing by the XP charts, is that the PCs tend to level up more sessions per level as they go; if it took them four sessions to go from 10th to 11th, it might take them five sessions to go from 13th to 14th, and six sessions from 14th to 15, for example.
But no, it's cool to change fraction of XP and loot, and I could have sworn there's a sidebar in the DMG that even says that in the very chapter.