…those who imagine that, by means of blood, and the smoke of sacrifices and burnt-offerings, they offer sacrifices [acceptable] to Him, and that by such honours they show Him respect, —these, by supposing that they can give anything to Him who stands in need of nothing, appear to me in no respect to differ from those who studiously confer the same honour on things destitute of sense, and which therefore are unable to enjoy such honours.The only real difference that Mathetes sees is that the Jews recognize the true God and the pagans do not. In contrast, Mathetes claims that Christians do not share in these religious practices.
On the working hypothesis that elves are to stand in for the Jews in this campaign world, the similarity between pagan and Jewish rites suggests that both practice arcane magic (reinforcing the elf-as-Jew idea). It also bolsters the idea that the Christian/Church analog use a different kind of magic (divine).
Given the emphasis placed on sacrifice, this passage also suggests that material components ought to play a large role in the casting of arcane magic. In contrast, divine magic would have none, since Mathetes makes a big deal about how sacrificing things to the creator of all things makes no sense.
I must admit, however, that I have never been a big fan of material components save for the odd adventure where a specifically rare component is needed in order to accomplish a major goal in a campaign. While there are opportunities to add flavor to spell casting, it always felt more fiddly than it was worth.
Given that sacrifice in both pagan and Jewish rituals were fairly straight forward, most of the time (Christians got into trouble for not burning incense), I figure that the material components need not be all that complicated unless players want it to be. Thus, I would probably simply offer a generic pouch of spell components for a flat fee that would allow for, say, 50 spell levels worth of components. Given that magic-users don’t have a lot of stuff to spend money on at 1st level, I am thinking of setting the going rate at 1 or 2 gp per spell level. Thus, the paperwork involved in keeping track of material components is kept to a minimum and yet arcane magic gets to have that extra flavor and effort that further differentiates it from divine magic.