Salis, increasing the raw materials needs to create items would be extremely destructive to the economy. As the economy stands right now, storage silos are big enough to hold the materials to make a large number of items. If raw materials needs were raised, storage space would be even tighter. I don't think most crafters would mind if each manufactured item actually took a while to make, but significantly increasing the amount of raw materials required to create items would mean that high level folks would be required to spend a LOT more time when they agree to help lower level characters, and lower level folks would spend hours collecting the materials for a sword and shield. While this might be realistic in some ways, one must also realize that our Avatars live in a much faster world than we do - time for them is faster than time for us.
If anything, I would say that reducing the materials required to make items, while making each creation take more time, and give more exp, would be better. This doesn't address any of your other points, but it seemed the most dangerous thing that you said.