In my experience, Midnight casting system is even more broken than the standard D&D system if you use it right. Even only with core and Midnight allowed, you can get some stinking tricks just by using rituals, and it becomes even more powerful if you abuse splats. But that's only if you play it abusing the rules (Leadership + Rituals + Persistent Spell = win). That said, there are some advantages the DFA has. Mainly 2: As is, the DFA isn't detected or affected by astiraxes, and the usual dangers for spellcasters don't affect them. And DFAs don't need magic items so badly as other classes, so the magic items nerf doesn't affect them so badly.
For the first problem, it's easily solved: Count their abilities as magic for effects related to it. It will even limit his usefulness, because a repeated use of his abilities will attract enemies quickly.
The second problem is somewhat harder to solve. The Path mechanics is there in order to cover the gap that the lack of magic items leaves. But, given that most DFA don't need many items to work decently, they don't feel so badly the lack of bonuses, and can instead focus on getting the most from the path chosen (and many are lovely). I would call it a judgment call - If certain path looks too troublesome, don't allow them, but allow the rest because most of them don't add too much to a DFA. For instance, I wouldn't allow him Warg or Spellsoul, because the first allows for some abusive ideas, and the second feeds on the "I don't need magic items" base (you don't lose much by selecting this path compared with other paths, and your allies gain a lot from it).
Lastly, the lack of "required" feats for a DFA to work makes him the ideal ritual helper/utility caster. You may want to disallow him to pick Magecraft or Spellcasting feats.
