It's a common enough concern.

I've been tinkering with the Rarity of Iron Ore in an attempt to solve the problem. I think I've balanced it out...but I need to play some games right through....and would like others to do so as well....before determining if the fix has been found yet or not.

Essencially, I've reduced the Iron Ore rarity from 300 to 250 in the CoreWorldResources.xml. I immediately noticed a consequential problem emmerge, being that Crystal Crag became over abundantly available. So I went back into the xml file and reduced the rarity of Crystal Crag from 300 to 250 as well. Now it seems that Iron Ore and Crystal Crag are showing up at desired amounts.

If you decide to try the same, please post your results so that SD has data to work with.

Cheers.

Just forces you to explore a little more and perhaps invest in an outpost instead of simply relying on cities locations to provide all the necessary resources.

I think you'll find that just the tip of the iceburg has been cut off by this change. It may honestly not be enough...

Essentially, to deal with the late game oversaturation, you've already hit on the two approaches.

1) Reduce % bonuses for metal related structures.  I like this approach better, less things to mod...

2) Bump the metal requirements for the late game weapons and armors significantly, to 'soak' up more metal ore.  This might affect the midgame as well, but as that will affect everyone more or less equally I think that balance will still be good.

My little mod that gives Guardian Statues and Idols XP bonuses does change the crystal situation a bit, as the statues need 10 crystal to build (don't remember the idol requirement off of the top of my head), and since the XP bonus is desireable, well it just makes the resource situation more interesting.  I've noticed that in the early midgame there isn't enough crystal to go around for all of those trinkets, if you are trying to save up for statues...  As for Vanilla LH, that isn't as big of an issue...

In addition to metal costs to late game magical items, one could always consider metal as a cost for city improvements. As an example, the Guardian Idol has a 10 Crystal cost associated with it. Surely there are improvements scattered around the tech tree (especially in the mid-late game) that requires metal for there construction.

As low hanging fruit, the improvements that improve metal collection should have an initial metal investment:

Smelter => 2 metal to construct
Foundry => 5 metal to construct
Large Foundry (parrotmath's wondersbase mod) => 10 metal to construct
Ironworks => 20 metal to construct

Even with that, it's peanuts off your endgame metal supply....maybe accounting for 50 metal...tops.

So, other structures that could use metal cost:

Lumber Yard => 2 metal to construct (saws take metal)
Timber Mill => 5 metal to constuct (saws take metal)

Warrior Temple => 5 metal
Weaponsmith  => 5 metal

All the weapons from the techs Enchantment, Magical Forging, and Arcane Weapons could have metal cost. Doesn't have to be as high as their non-magical counterparts, but I think magic should be harder to construct as it generally is better.

Arcane Armor should also have a few more armor types available. Why only the one? Why not Arcane Plate? Why not Arcane Chainmail? Can't there by an Arcane Cloth armor? Naturally metal should be considered for these as well (well, not the cloth).

With all of this in place, one could conceivably spend 200-300 additional metal throughout the coarse of the game, and perhaps in conjunction with reducing the rarity of Iron Ore and Crystal Crag down to 250 and 250 respectively, it will be enough to make Iron Ore a valued resource again.

I'm going to see what happens with the 1.2 patch, but I'll seriously consider putting together my own mod if it's not addressed... 

re: firefly

Several interesting ideas in there. Adding metal costs to arcane gear makes sense but I kinda like the split between crystal for magical gear, metal for mundane gear. Metal for buildings could work but be very careful about buggering the early game if you don't get any iron right off the bat. Adding more things like the Guardian Idol is a great idea and definitely worth exploring. Ultimately, I still think the balancing issue lies with the metal buildings adding too much late game.

Agreed. I too kinda liked the metal/crystal split, but the realistics of the matter show that the crystal route is simply more powerful than the mundane route.

I suppose another way to tackle this problem would be to have the crystal weapon variants do slightly less damage than there mundane counterparts, but justify it with the fact that they grant elemental damage with there fire/ice/lighting attacks. Not sure how this approach would look like or how the game would change because of it. It's a pretty big balance change.

That's a very interesting idea. Instead of collecting iron, invest it. I like it!

You would need the option to switch though. If you raze an Iron Mine, do you destroy the natural resource as well?

As a side note: Changelog 1.2 has shaved off metal collection from the Foundry (now +3 only) and the Ironworks (now +6 only). So, it's a start.

correct. The magical  tree relies on dodge to get you through it....spells and otherwise.