Artytheurge, an all new Theurge prestige class!

[Veklim]

Also, the breaking of items means that you can buy xp and zoom ahead of the group in levels.
In short, the breaking is broken.

Nope, it's added to craft reserve so it's only usable on crafting items, doesn't go to your character XP at all.

Also, put a time on how long it takes to break an items for gold and xp.

Retain essence requires 1 day with the item so I'd assume this follows suit.

The ability is actually not as good as retain essence either, and you may wish to put in some sort of proviso in case the character already has retain essence, since they get 100% of the XP just from that. Sure, you get 50% XP and 50% gold from your version, but I'd rather the extra craft reserve personally.

On a completely unrelated note (to the above, but not the class), I would personally say you want some break-up of the spell-progressions in here, probably do with a level of just infusions (maybe level 1) and a level of just spellcasting (probably level 5)

I'm considering cutting down BAB to 1/2 and cutting skills to 3+int mod.

I'd agree with the BAB, but not the skills.

Might wanna think about giving an ability allowing you to cast arcane spells in light armour without penalty (since Artificers tend to stomp about in nice shiny armour so they have something decent to infuse and a halfway reasonable AC without too much need for dex.).

Drop the idea of stacking levels for the sake of bonus feats, just give them a couple as part of the progression, and set them as item creation or metamagic only. 3rd & 7th would be good levels for this.

...and a daily limit on the Infusing the Arcana class feature

Make it 1/day/class level then, gives a scaling progression and reduces nova capability to a more reasonable level.

In principle though, really nice idea!