@Fallen Muse & TheSovereignGrave:
First about the rarity of magic - we don't have elves and we don't have numenoreans (who aren't really humans with their longevity and shit). Even if you count all of those other fellows you just brought up, how big a percentage of the entire population of their respective countries do they represent? I want mages to be unique and legendary (I must've written it several times by now), not uncommon and boring like in ES or its likes. I don't see the problem with conforming to this.
Second about the magic vs tech idea: I've never stated that a nation can't have both magic and tech. The cardinal rule was more tech = less other stuff.
Maybe we should restrict population size to technological development? Renaissance era = small nation, medieval era = medium nation, ancient era = large nation. Is that a viable idea?