seems a bit low for a location that is the center of the first 5-6 levels of a game. is anyone actually enforcing this?
I enforced it. It's based on the core rules. But if you read a little more carefully, you'll find that some of the merchants in town can order more powerful items from the Free City, but they don't arrive for a week or more. As is, Diamond Lake doesn't have any high-level casters really capable of making anything more than the most minor magical items.
It's your campaign though. If you want to run a high magic campaign you can dot a few more high-level casters to provide your PCs with teh uber magicks. But in my opinion, it really won't matter much. The PCs have no need of magic weapons for a long time. By the time they actually have enough money to buy serious stuff, they'll be in the Free City where the sky is the proverbial limit.
Then hopefully they bought everything they need before that, lol.
Heh, then they hole up in Magepoint and buy stuff from Tenser.
I enforced it last night, as the group tried to sell off all their loot. No big deal so far, but they weren't big on negotiating. A lot of bartering with Allustan ("We'll give you this if you identify these, etc.")
I have mostly enforced it. I have let them sell a few things, but they have bought items from those same people so the costs balanced out. They have also ordered items from the free city for a nominal 5-10% handling fee. My group is also part of a guild, which gives them some additional help on getting items bought and sold.
What happens if the Free city is destroyed in The Champion's Belt???
If you are in the world of Greyhawk, there are plenty of other options (besides Magepoint) that are nearby, relatively speaking. For example, Dyvers and Hardby are both cities where PC's could go to purchase some major items (or get them made), and a trip there doesn't have to take them too far off the beaten track.
Oh yes, it's enforced here too. It's the closest I care to come to simulating a working economy, so I'm not going to toss such a simple mechanic. One of my favorite things about Whispering Cairn was that most (if not all) of the treasure was in "stuff". A character who finds a (relatively) huge stash of gold on his first adventure is hard to motivate to his second. If they come out with a bunch of stuff that, while expensive, isn't easily sold, they get the satisfaction of a good haul with the frustration of "needing" to continue adventuring.
The next adventure, 3FoE, conversely had large amounts of coinage lying around in easy to spend stacks. By 5th level, the party will be quite wealthy compared to when they started and will need a stronger justification to continue adventuring.