Adding a spacer does give more travel because you move the upper and lower arms further away from their respective bumstomps. By adding the spacer, you are basically making the distance between the two arms greater.

As far as the material, I was wondering the same thing. I think a high grade aluminum would probably be okay, but steel might be better-- and cheaper probably.

I was also thinking about what would change with the path of suspension travel as the suspension moves up and down. I wonder if it would adversely affect the on road manners.... maybe by causing a change in camber because the a-arma are traveling in arcs that are different than stock. Just theorizing here. I would have to lay it out on a cad system to see what the differences are-- but I don't have all the measurements for a stock suspension right in front of me either.