The material costs probably have first and foremost to do with levels of precision available in the process of gathering, and the general output/ease of gathering. In 1.0, gathering nodes were spread throughout zones. While hostile monsters covered less of the land, that still meant a higher general requirement of stealth, and far longer trips between nodes. In addition, each gathering attempt came with a mini-game, which therein involved a chance of failure beyond your mere stats, along with differentiation between success and critical success (not simply HQ items). I'm not sure how many levels were included between those. When 2.0 pushed gathering out of the majority of the game world, isolating it instead to small, tight loops of nodes, each of which only had a chance of failure based on your stats, naturally people came to gather the same amounts in a lot less time. Moreover, if there was no only a success/HQ success/failure, there wouldn't need to be any further modifiers inflating the maximum number of possible drops from a single attempt, so you could then keep the loot table output and more controlled. I expect that this and the increased material requirements worked hand in hand to counter the output difference involved in their decision to isolate and facilitate (however gimmick-ly) gathering.
That's not the only result. As with any number squish, there's also a potential loss for precision/differentiation. That doesn't particularly matter at this point, as there are no modifiers to output beyond simple stat-based dice rolls and the node-specific chance, loot, or attempt count buffs, but it would be something to consider with any revision aiming to make gathering more engaging.
Side-note: I don't remember the PS3 as being mentioned in having issues handling the list item "list" or total number of items possible (after all, we've more now than then, and PS3s are handling just fine), and the only difference between the "inventory list" and our current, more standardized inventory grid is that you used to see smaller thumbnails of each item, arranged in resortable in different orders and categories (alphabetical by default), with the full name written out, as compared to a larger thumbnail and item names shown only on mouseover/grid-select. There also used to be a lootlist, or temporary storage from which all party members could grab loot, of up to 15 slots. No reason was given for its removal, although the PS3 could clearly handle it for the entirety of 1.x's life; I personally have missed it since, as it was a great way to handle the distribution of group loot, especially when including less valuable materials.
All other points of that post I mostly agree with, though.
I played 1.x on standard settings at ~30 fps on a potato of a computer. Overall, I'd have to say it looked slightly better than when playing 2.0 on the same settings, again at ~30 fps (dipping more in the open world due to higher doodad count than in 1.x but about equal in cities and truly open area), on the same rig. I don't know why people are so quick to perpetuate this myth that 1.x was unplayable. In general, the world design changed drastically and the lighting started looking a lot more washed out, the skin more plastic, and the character lower in poly-count, and a lot of things lost resolution. I didn't gain any FPS over the transition from 1.x to 2.0 at the same settings; I just got more doodads strewn about the open world that changed the feeling from a frontier to a mostly settled theme park. That change attracted more players, and the amount of objects viewable at one time was allegedly impossible for Crystal Tools (though in turn, Luminous has made no show of giving back the higher resolution or poly counts than CT had), making the Luminous Engine superior in terms of attracting players. But it was not some miracle breakthrough, nor was Crystal Tools unusable refuse.