The thing about point #2, regarding whether or not timed-out spells count against your spells/day, is that if they don't it's a huge reversal in the dynamic of the sha'ir. The spell timeout changes from a major problem into something that is not only liveable with, but arguably an advantage. If a wizard doesn't like a spell he's prepared, he's stuck with it until the next day; a sha'ir has that slot available to prepare any spell he wants in a few hours.
The thing about saying that MotAO overshadows the sha'ir's spell fetching in only seven levels (aside from, as noted, explicitly only allowing PHB spells plus "others designated by the DM") is that the sha'ir doesn't have to spend those seven levels on MotAO for most of its benefits. He can spend them on other prestige classes and get them and the flexibility. You can go (to combine some suggestions already made) sha'ir 8/skypledged 7/contemplative 1/dweomerkeeper 4, for example, and good luck fitting seven levels of MotAO into that build without pushing out something considerably more useful.
Edit: The relevant bit on Skypledged is Divine Spellpool, which is pretty much the same as MotAO spellpool down to the PHB-only caveat, except it uses cleric and druid spells instead of sorc/wiz which is considerably more valuable to a sha'ir. The PrC requires being a raptoran and bars you from casting spells with an elemental descriptor other than air (although magic items are fine - time to shine up that UMD!) The biggest issue I have is that going raptoran makes the skill points even tighter, but on the bright side you have time to build up your INT bonus since there's no skill reqs on this build until level 15.
Yes! That is awesome! That is 150% better than MotAO except for the Race requirement. It also gives you access to Acorn of Far Travel shenanigans! I worry about a build that can't support Concentration, Spellcraft and Diplomacy though. Still, that is a great find. Ten thumbs up.
Edit: The build also looks very sexy. I like that there are a bunch of Divine PrC's here as well, makes me laugh. I feel like now we're getting somewhere (though I admit a fair amount of disappointment that where we are getting involves Raptoran).