One of the big reasons that "magic" is always exploited heavily in any RPG setting is that anyone can be a mage.  If the mage is obviously the super-class that can turn the laws of nature (and game balance) upside-down, why would you not want to be a mage?  This is particularly true in the great crucible of RPG flaws, the MMORPG.  At least in a pen and paper campaign, you can assign arbitrary penalties for characters who wish to use magery (i.e. GURPS’ "Magical Aptitude" and "Unusual Background" costs), and in a smaller scale CRPG you can toss out the assumption that most of the world is not made up of mages, and therefore it’s okay for the protagonist party to include a few.  But in an MMORPG, everyone wants to be a mage, and there’s no way under the current models to say they can’t be.  Asheron’s Call made a go of it with their research system and spell economy, but ignored the axiom that all people suck, and so before beta was out formulae were everywhere, nobody cared about the economy anymore, and they were back in the same boat.

In the MMORPG, it’s hard to justify a rarity of mages to your players.  They all pay the same subscription fee, don’t they?  Say that magic is only available to a tiny number of people who "have the gift," determined randomly.  Now the guy with the account that doesn’t include someone "with the gift" is hosed.  Either that or he just keeps rerolling and killing off characters until he winds up with a mage, and then you have the same situation as before, except now people are yelling at you on forums about your "stupid time-wasting system."

The common response to this problem is to simply assume that magic will be used by anyone who wants to be a mage, and try to keep it on par with the other class types available.  This destroys the allure of "magic" and turns it into just another way of killing the bad guy.  If magic is better for killing the bad guy than an arrow, then archers will just be mages instead.  Magic becomes a commonplace activity, and the use of magic is just another tool, no different from an axe or a plow.  To me, this is tragic.

A game that seeks to limit the number of players who choose to be mages often goes down another route that’s even stupider:  the weakening of mages to the point of nonsurvivability.  This is sort of akin to the D&D concept of a mage’s life:  low level mages can be killed by having someone sneeze on them, and they can cast one pathetically weak spell before they go back to cowering behind the fighters.  The tradeoff in D&D is that your mage may eventually become a god on earth if he lives long enough.  This is not a consideration in an MMORPG, since (a) you can’t really die anyway, and (b) eventually everyone will get to high level.  Therefore, the MMORPG version of this is to make the mage weaker at every stage.  This leads to players dropping their subscriptions, and more importantly, nobody being a mage.

There is one solution that seems possible to me, a way to make mages relatively uncommon while not hamstringing them into comas.  It involves requiring a quest of sorts in order to become a mage in the first place, i.e. you cannot start as a mage.  I thought of this while drawing up design specs for a radically modified Sphere shard that I never finished, and as of yet I haven’t had a better idea, so here it is, in summary:

All characters start out roughly the same, with no magic.  No magic is ever available to them with the possible exception of minor shamanistic magic (healing, far sight, maybe watering the plants).  In order to become a "mage," a character has to undertake a very dngerous quest which he is expected to die on.  If he manages to make it through the quest, he winds up at the place where you become a mage (secret mage academy, alternate dimension full of alien mages, underground genetics lab, radioactive meteorite, whatever).  Assuming the character still wants to become a mage, he can… he loses a bunch of his other stats and such, maybe the ability to use certain kinds of gear, etc. etc., in effect trading in his moderately high-level character for a weak low-level mage.

Of course, this is not a solution in itself:  magic still has to be balanced to some degree, you have to ensure that mages can’t immediately go from mewling newbie to god overnight, and ideally the quest to get mage status should be dynamic so a quick and easy solution can’t be spammed all over the web one day, ruining the intent of the exercise.  However, if successfully implemented and maintained, this system might, for the first time, allow someone with a mage in an MMORPG feel like he has actually accomplished something, as opposed to hitting the right buttons at creation time.