What if instead of DR 5/magic, I removed that and gave them Fast Healing 3. Is that equal? In my game I wanted to give each character a Legendary Weapon (instead of the 1000 gold that each character is rewarded at the end of the first adventure)This means that my characters would have +1 magic weapons. They would easily bypass the DR of the savage creatures, making them less of a threat. What do you think of the substitute? Too strong? Too weak? Just right?
Depends on your players overall "power" level. And by power, I refer to a combination of point buy/dice method, teamwork, and optimization.
Fast healing 3 might be about right for a standard group. A "stronger" group might be more suited by fast healing 5. Since there really aren't any savage creatures worse than Ripclaw, it doesn't become much of an issue for "down the line" use of the template, although down the line fast healing in any amount would be more powerful than dr/magic.
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Our general consensus is that at low levels, the Savage Template is VERY nasty for CR+1. They get Natural Armor, Damage Reduction, A bite attack with disease (variable fort save), 10 free hit points, a death throes bite attack, and an acid splash when they die for d6 if you fail your save.
With a higher level party, that's not that scary. 10 extra hit points on a guy with 60 is barely noticed. But when they only have 10 to start with, it's double. That's a big deal. The DR only amplifies that. Then, as you point out, it's not real common for everybody in a low level party to have magic weapons. Not so with the more experienced group.
What I'm getting at is that I don't think you need to do anything about the magic weapons issue in terms of the template. I'd consider adding an extra bad guy or two here or there, since they'll all lose the DR, but other than that, I'd just let it go as is. It's still plenty nasty.