While I have no problem with high magic games (having played in a few and had much fun), I find that when I'm writing, I tend to go for very low magic games (not intentionally, it's just how the stories write!). So yes, prists can cast divine magic... but only that maqic specifically suitable for their deity - a priest of Valir (goddess of weather & elemental forces) could summon a lightning bolt from a clear blue sky, or shelter himself from rain or sunburn, or walk unhindered through a hurricane, and so on, but
only if he is properly pious, spreads the word and does all the goddess asks. And that particular goddess is not entirely reliable either, so the high pirest of the biggest temple in the land might call for a bolt of lightning to smite his enemy, only for nothing to happen.
Non-divine casters are present, but they are disliked, feared, and shunned. They have to work years to attain any significant power, and all but the most powerful require rituals and lengthy castings to cast even quite mundane spells. But I do allow for magical effects such as teleport - if the mage has the dedication to attain the knowledge.
I actively dislike settings like the standard D&D 3.5 where all clerics are carbon copies of each other, where magic items are so common they are bought and sold like any other commodity, and spell casters are common. The
identify spell is first level, and tells you everything there is to know about an item. Too powerful. In my game it literally gives the item's name (and since 75% of the items in my game are made up by me, book knowledge probably won't help too much
)
That said, every game has it's own level of magic. Runequest for example is high magic in that magic is everywhere, but low magic in that almost all of it is pretty mundane stuff - only the reallty dedicated priests, sorcerors and shamans get to use the world-changing toys - and there aren't a huge number of magic items either. It's difficult to say if any combination is better, because every world is shaped by the level of magic within it, so comparisons are impossible to make. Any level of magic works, it just changes the flavour of the game accordingly. And while I prefer the flavour of low magic, I do sometimes like to taste the richness of high magic. Or a combination of the two.
And regarding the PCs as average Joes & Janes - I prefer it when the PCs are in some way exceptional. For example, a PC in D&D might be rolled using 4d6 choosing the best 3 for stats, but the normal people only get 3d6. In RM/SM PCs get to ignore any roll under 20, and replace the two prime stats of their professions with 90s if they wish - regular people can't do that. So the PCs are still within the boundaries of what is normal - they are just better at it than other people. This kind of character tends to rise to the top - so I would create my significant NPCs using the same method, and also any hirelings etc - they are also taking the same risks azs the PCs, they are just not being played by a Player sat around the table. That also makes it easier if someone wants to take over the NPC and start playing them properly.