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Either your ignoring this suggestion or you just missed it:
MW is still +1 to hit, +2 to damage.

As I said before I think "to hit" should rise before damage. Look at regular masterwork in the PHB. It improves "to hit" but not damage. If you disagree, I would like to know why. If you missed it, what do you think?

If you want to keep the size change that's your perogative. When I "borrow" this for use in my own campaign world the table will not include the size change.

Also: You didn't add in the cap on the price of QW. Without a cap really expensive items will be cheaper as EW than as QW. Now that I think about it though the cap should be:

For items which cost more than 125gp the cost of QW is +250gp

This way QW is always cheaper than EW (the cap I applied previously made QW and EW the same price for really expensive items).

Glad you agreed Thally.

As for the materials issue: your already requiring that some of these materials be used in the forging of items which are EW and better. Along these same lines its logical that the material qualities don't stack with the benefits of the diffrent grades.

However, if material qualities do stack, then I would argue that these special materials shouldn't be required to make items which are EW and better. The bonuses for higher grades in this case come from techniques and skills that the smith has mastered (e.g. folding techniques) not the materials used (which justifies the higher DCs in my mind).

As for avalability of materials, in the first case they shouldn't be very rare at all. They are used fairly extensively in your higher quality work so any smithy which serves a clientel rich enough to afford these items should have some of the requisite materials on hand.

In the second case the materials should be very rare and highly sought after by experienced smiths. A party stumbling across 10 lbs. of these materials should consider themselves very rich.

Note: in the above I am only speaking of special materials like adamantine and mithral, not precious metals like silver & gold.

Another thing: your current limit on "magicing up" items only includes a limit on the enhancement bonus. I think you should also include a limit on enchantments so that you don't get those +1 vorpal longswords of speed made from EW longswords.

A limit of +2 equivalent in enchantments on a EW item and +4 equivalent in enchantments on a MW item seems to be in order.

So a +1 flaming burst longsword might be made on an EW longsword base but a +1 brillian energy longsword would require a MW base and +1 vorpal longsword would require a GMW base (despite them all being +1 weapons).