I'm building a campaign and homebrew world in which I'm planning to have most forms of arcane magic either flat-out outlawed or at least STRONGLY discouraged (due to a MAJOR mistake made by a group of human wizards several centuries ago in the world's history). While divine magic will still be accepted, arcanists will be in the severe minority.
In its place, however, I've been planning on allowing psionics to help fill the gap (and I'd be playing with the idea that psionics and magic are definitely different).
Has anyone tried anything like this before? Success? Failure? Lousy idea?
That's actually the founding premise of the Dark Sun campaign setting. The main form of magic that exists is called defiling and is ecologically harmful, rendering much of the world awful desert and is largely the purview of evil city dwellers and monsterous cultures. Divine magic is limited to raw elementalism since the gods of Dark Sun departed long ago. Most clerics are crazy people who tried to sacrifice themselves to the elements for power but were mysteriously saved (ie. throwing themselves off a cliff for air, burying themselves alive for earth, etc.)
In its place usually are psionics. Even magical beasts are psionic rather than magical--and really since the setting is so brutal, its kinda' to the point where only the magical beasts have survived outside of domestication. Likewise all of the races were created by scientific experimentation (the druidic equivalent of necromancy, really) and near ubiquitous psionic abilities are the result. Everyone is at least a wild talent, but many people who actively pursue it are much more powerful.
So to answer your question I think it would work fine. I've used the new psionic abilities enough to know them and really enjoy them. You'll certainly want to decide for your world how magic and psionics interact--ie. are they transparent to each other, so that dispel magic also counters psionics? Are they different, but on the same footing ie. mages have special powers to protect against psionics and vice versa? Are magic and psionics diffent completely with mages and psions as impotent against each other's powers as everyone else is from either group (my favorite, personally)?
From the description of your setting it might be fun also to have magic be more powerful than psionics, but banned, in your setting--so they are transparent to each other, but magic gets a +2 to caster level and a -2 to psionisists when the two clash. That would make magic tantalizingly potent, but forbidden.
The setting sounds interesting. Good luck with it, and give a holler if you have any more questions.
Hell, if you want you can replace the divine spellcasters with Divine Minds from the Complete Psionics handbook as well and just rely on powers like "Touch of Health" and "Mend Wounds", maybe with alternative healers like Truenamers and Dragon Shamans thrown in for good measure. True, that would mean the party would probably have to have more than one person with healing ability, but that may make it more fair on the guys who chose to heal their friends so they can do something else when no-one needs to be healed.
And giving arcane spellcasters an advantage is unnessecary, they already have their own edges i.e. more spells per day, more spells known for wizards etc. Maybe chosing to say that magic and psionics don't overlap and only giving the arcanists (and those with the Magic mantle) the special spells that affect the other disipline would give the feel you're looking for.
The idea is awesome though, so good luck.