Step 1: Add magic-boosting enchantments that make the magic more powerful instead of decreasing cost. +Damage for destruction, +Levels affected for illusion, etc.
Step 2: Add superior spellbooks to the game as non-vendor loot ala the Spell Tomes addon for Oblivion. Make finding a dusty book in a treasure chest exciting.

Done, problem solved, mages happy, easy to implement!

So i think that we should be able to use spell tomes once to lean the spell and then you have to find three more and use them up to max its effectiveness. So to get a spell to full power you'd need 4 tomes. But the spell would be considerably more powerful. That would balance magic out while still making you work for it and save for more spell tomes.

Upgrading spells with multiple books is a fairly neat idea, I could go for that.