I am not in favor of your idea.
The first thing that I thought of when I saw that, is that the evil groups, with Liches, would have the majority and the best magic available.
Followed with the elves, but with them using arch-liches, would have the next best selection of magic.
Most PC spell-casters do not make magic items now, because it costs them a few XP. I believe that even fewer would make magic items if doing so would age them.
As an alternative for XP costs (for crafting items as well as spells such as wish), consider aging. A character crafting a magic item ages a number of days equal to 1/25 of the base price of a magic item; a character casting a spell with XP cost ages a number of days equal to the XP cost of the spell.
1st Level Scroll: age 1 day.
Cast wish: age 5,000 days (about 13.7 years).
Craft some 1,000,000 gp item: age 40,000 days (about 110 years).Why I like it (YMMV):
o It provides a mechanic that would limit the amount of crafting, but not eliminate it altogether.
o It doesn't really penalize characters for crafting, the way XP costs do (for the most part, aging actually improves casters).
o It provides a means to explain why some (if not most) high-level wizards are elderly (whereas high-level PC wizards in 3.5 are almost always 20-something).
o It actually makes the longevity of elves and dwarves worthwhile.
o Flavorwise, it is a better representation of putting your essence into the magic item.
o Okay, I admit: it also reminds me of some of the things I really liked about 1st-Edition AD&D.
You might want to consider certain other aspects of this.
1) Not every campaign has characters who know their birthdate down to the day and a calendar that is tracked like a real-world calendar. That would be important here. "Oh, I'm 35 years, 11 months,and 12 days old. If I make that armor for you Sir Bors, I'll go over my next age category. I don't need to be losing the point of Constitution just now, when we're about to go on campaign against the Dragonarmies."2) Define 'penalize'. When you age, you lose points off of your physical attributes faster than you gain points to your mental attributes. Losing XP is a penalty that self-corrects through the 3.5 experience point system.
3) Now this point is subjective, to be fair. Just because you aged your body from the enchantment of a magic staff, why should you then gain points in Intelligence, Wisdom, and Charisma? You didn't live through all those years, so why would you grow smarter and wiser when you just spent weeks and/or months hiding in your tower muttering arcane syllables over a staff.
4) I agree with the fact it makes a longer lifespan more important. So why don't all elven wizards come equipped with enough magical firepower to break a tectonic plate? They can afford to burn a few years to arm themselves to the teeth, can't they?
4) What do you do with a dragon? How about something that's effectively immortal, like some fey and outsiders? When you can live forever (or too long to really consider), what did you really give up? Money? You're now armed to the teeth: you can get that back just by blowing up a few castles, killing a few dragons, or whatever.
To be fair, I like the flavor as well. If these points can be overcome-and some can, with simple bookkeeping-then I think it'll work.
Unfortunately, this would just encourage everyone to play an elf or dwarf if they want to make magic items. While the flavor of that is somewhat appealing (as both races have strong story inclinations for creation of wonderous, magical items), mechanically it sucks. To keep things fair, you'd have to have a different multiplier based on the race's longevity to keep things fair, and I don't think the hassle would be worth it.
Although I'm really hesitant to point this out, a more "even" version of this is to apply the cost in ability points. Thus, for every so-many XP cost, permadrain one point of an ability of your choice. The d20 Elric rules did this. It's actually more painful than losing experience, especially since you gain ability points so rarely.
That's pretty much how 1E/2E handled magic items, but I'd rather not use any mechanic that cripples a PC over time, rather just puts a limit on how often it can be used. XP sort of worked because you could get it back over time, and fairly quickly at that. Ability drain - that's just a pure loss.
GP will work if the DM keeps a tight reign on the game, but I'd really rather just see a "pool" or "inventing points" characters could use to make stuff (say like the artificer's XP pool). When the pool runs out, the hard limit is reached - no more items until a new level is achieved. Its not realistic, but would help to keep magic item plethora in check.