My linkshell has been playing around with the "forbidden" materia. For our testing, no I can't show you data yet, the second materia only seems to have about 40% chance to work and it only gets worse from there. Even if it is higher than 40%, that still is not a high success rate to loss everything on. For the sake of easy math I'll say materia is 50% and doesn't get worse with each materia after that.
1st 100%
2nd 50%
3rd 25%
4th 12.5%
5th 6.25%
Now lets say I want a 3 materia +3HQ weapon. For the sake of argument, I'll say I find a cheap seller for my weapon. 500K gil per weapon. On my server, I see cheap materia at about 250k. 25% Success for for my final weapon not to explode. So that means I'll need about 4 +3HQ weapons, that's 2 mil gil so far. 4 material for intial + 4 second + (ill go small) 2 for third. That is 2.5 mil gil. 2.5 mil + 2 mil = 4.5 mil for one three materia weapon. That is assuming low costs and a higher than tested success rate. Say dungeon should be equal to 3 slots of materia is a little much.
Most current 'raids' and NM and are old. I would guess that materia was planned to be stronger than current drops to make people play with and get interested in it. Next patch with end game content will probably have gear drops scale with the materia in mind.
Just my line of thinking.