I passed my questions around our office here, and got a good response; so i thought i would share.
1. You are correct the reduction in fees is minimal
2. The commodity code does not change based on the customer. Not sure why Sage did not implement this at the item level
3. As I'm sure you have discovered these are parent codes (category) with children codes (subcategory). Often if you are billing only one type of category only the parent is necessary. Service billings have their own Commodity codes
4. The amount of information which needs to pass through the cc processor to the customer is not trivial there is a lot to pass on each line other than commodity code including item code, description, unit price, quantity shipped, taxable/nontaxable flag (Y/N), tax rate, tax amount, unit of measure (from a defined list EA being the default), commodity code (from a defined list), line discount rate and line discount amount.
As far as I know you only get the level 3 rate with corporate or government buyers who are entered into the level 3 billing mechanism. This will generally be very large corporations and large government agencies. No savings for 99% of the buyers in the world. Even most large corporations are not doing their purchasing with credit cards according to this model. I think most sellers attracted by the lure of cheaper rates will be bitterly disappointed by their savings unless they know in advance that their business is largely working with level 3 buyers who use credit cards and have significant transaction volume..