While I haven't been a part of the original Graterras, I did read about it with the reroll thing.. I think it's a good idea to toss out a few races.. Too many races is like too many cooks.. It's gonna be chaotic.. Sub-classes are nice, since they give a better guideline yet allow a certain amount of freedom to people choosing classes.. As Murdoc said about Kurotsune's RP, there weren't any restictions, but we had 3-4 magic archers and basically ended up with no diversity.. With subclasses new ideas are introduced to players and would definitely help diversify the PCs.. Plus it can be considered as a compensation to the removal of the races..
As for the magic bit, I would suggest something similar to what was done in the reroll.. Only thing is you can give the restrictions on classes/sub-classes.. Keep very basic spells and magic stuff available to most/all and the more complex ones can be restricted based on the sub-class as a sort of specialisation.. Kind of what you did with Oohagan.. This makes it easier for people who have no D&D experience to manage playing the roles..
Also if there is a slot, I would totally be signing up!