TheGogmagog said:
The DMG (P42) suggests the character wealth required to "be an effective character". It also suggests that no one item should be more than 50% of thier suggested wealth for a new character. It also suggests 20% variance would require adjustment, again for determining wealth of incoming characters. It makes no mention of what equipment new characters have to chosse from. Are scrolls of vile darkness availble, are boots of elven kind available?
Amd a 6th level character with 6,000 GP worth of equipment is effectively 5th for the purpose of gauging that character's strengths against a typical module.
Though these percentages are for bringing in new characters, I think that it's fair to use them as a measure of magic availability. Since there is little in the game that's non magical and more than 2,000gp, a character wealth in excess of 6,000 becomes pointless in a campaing where magic items don't exist or are equal to artefact value (ie. no price/cant be bought). Ok, you can buy/build a castle and such but that isn't likely to affect how effective your character is.
I think you can keep all the magic items from the DMG, and limit wealth.
You can reduce the value of many potent magic items, by limiting their uses per day, or grant them charges. Suddenly a flaming sword that you can only recharge if you soak it in the blood of a fire giant is much more flavorful, and the fighter will be that much more careful in activating it. I call these petty magic items, they can go a long way to keeping too much power out of the character's hand. A flaming sword that is "always on" almost seems like a relic in these cases.
I think item availability significantly changes how effective your character is. The sorcerer with a +5 flaming ghost touch dagger he found, is going to be less effective than if he can trade it in for a ring of wizardry II. The question now is, what is the character wealth expect to be distributed with, selected items or randomly generated items?
In cases like these, you are better off letting the players give you a wish list, then carefully place those items throughout your campaign. Make sure your NPCs are stocked with one-shot or limited use items. That way, when the players find that permanent magic item, it becomes
really special.
As far as buying magic items (I don't have my DMG), considering that Boots of Elvenkind cost, what? 2500gp? Based on the 50% guideline that no character should have a single item worth more than 1/2 your EQ bonus, suddenly no one below 5th level would have a pair.
Since you are drawing a little from Tolkien, take into account who makes what items. Elven items are going to be twice or three times as expensive in a human city, but in an elven vale, they might go for normal list price. Adamantite or Mithril might only be forged by dwarves, which might limit there availability and require the party to go to extreme lengths to get a fair deal on a Mithril Shirt.