Hey! Thanks for the interest.
I was originally thinking of crafting the spells but decided not to go down that road (gotta scale back my scope somewhere, it was originally HUGE). Instead I've opted for something vaguely like Magic: The Gathering or other CCG. Basically you have different "colors" of energy and all spells will be preset (you'll start with just a couple, and can obtain more through various means). As you level up, you will have the opportunity to focus on the colors you wish, thereby allowing you to cast more powerful spells more quickly in that color.
The balance aspect may be difficult, but the plan as it stands is to allow the player to cast as many spells on his/her turn as there is available energy to cast, so generating energy more quickly will give a huge advantage in combat.
The game is obviously far from done, but I'll but submitting a build for consideration to the Boston Festival of Indie Games in a couple weeks. If you're interested I can pass along a test build to you as well.