I am by no means done the mod as I've been on a bit of a break from it, but in regards to the two major questions there, I do have some thoughts.
Materia Placement: I think by and large, it seems pretty on point. Everything that you gain, when you gain it seems fair and balanced. There were a couple of times when I was a little disappointed but that's probably due more to my play style than it is bad balance. The only real "issue" I suppose we could call it I could raise is more philosophical than anything else. I'm not even sure if this is a negative or a positive but between the Materia you get from finding new teammates and the Materia you find on the ground throughout the world, I don't think there is ever a single time in which you can buy Materia in a store that you don't already have? Again, I don't even know if I would consider this a positive or a negative, especially since this is considered a "poverty mod" as you put it, but I suppose something is lost if you never find new Materia in stores when you first arrive there? Of course if you are low on funds perpetually throughout the first Disc buying new Materia seems like a stretch to fit in there, but you could counter argue it makes what little Gil you do have on hand all the more valuable. There's a good point and counter point either way and I really don't know where I fall on this personally, and I'm sure most people don't care either, but it is something to potentially think about.
Difficulty: As I said I am not finished the 1.5 Arranged play through quite yet, so this is by no means a full picture. However, one thought has been ringing through my mind so far. Other than a few moments here and there, by and large... uhh, has the mod gotten easier since 1.4? Looking at my video times so far, the time of the fights have gone down pretty substantially almost across the board. Other than a few fights that felt the same or harder, Lich being the best example for me specifically, the bosses have felt easier this go around. I'm doubting that's because I've somehow improved my game that much from 1.4 to 1.5. I'd actually go so far as to say there have been some regular enemy encounters that I've been more threatened by compared to their boss. The bosses feel like they have less health, but they feel like they deal more damage. So what's the story here? Has this mod become easier overall? Did I really change it up that much? A combination of both? Something else? Curious about the thoughts on this one.