Quote Originally Posted by Ziegander View Post
Masterwork weapons, despite having an enhancement bonus to attack and damage rolls, do not overcome DR/magic. Likewise, they cannot hurt incorporeal creatures.
I'm not entirely comfortable with this part. If you remove the part about DR and maybe add a minimum threshold for hitting the incorporeal, I think it would function a lot better as is, this system provides a limited way to avoid WBL and the magic marts for both the DM and the players without the use of Crafting feats. I like that function, and I feel there's no need to penalize it.

Quote Originally Posted by Ziegander View Post
Masterwork armor also reduces the armor check penalty of the worn armor by an amount equal to the enhancement bonus.
Good call. Maybe 1/2 the bonus to maximum dexterity bonus?

Quote Originally Posted by Ziegander View Post
Any effect generated by a magic weapon property is considered a spell-like ability and is subject to Spell Resistance. The wielder of a magic weapon checks against SR using his level as his effective caster level, or his actual caster level, whichever is highest.
This is going to slow down gameplay. A lot. And it makes most magic properties on weapons less useful to fighters than they are to gishes, so you might want to change it from "caster level" to "character level."

Quote Originally Posted by Ziegander View Post
To add a magical property to a weapon or armor a character must possess the Craft Magic Arms & Armor feat.
I'm tempted to say this should go, and be replaced with a higher echelon of the Craft skill. You're limiting magic items pretty extensively like this, so you don't necessarily have to worry about associated breakage problems.

Individual magic properties look mostly good, although the ones with saves are still going to cause gameplay slowdown.