Psionics instead of magic?

I've always got a good half dozen or so wikis in various stages of development (usually not very developed) and one of them that I've recently turned some attention to is one based on the concept of using psionics as a replacement for magic.

Because a region of Eberron does something similar(ish) I've attached a small portion of Wayne Reynolds' cover for Secrets of Sarlona, showing an inspired woman, a psionic villain, with a little bit of a quori monster behind her. But, I don't want to recreate Sarlona, I want to take this idea my own direction. Of course. I'm too much of an egotist to simply use someone else's great ideas as is, without putting my own personal stamp on them.

In requesting feedback on how to do it, I'm finding that D&D players in general have a hard time seeing the word "psionics" and not thinking "science fiction." I specifically don't want an overtly science fictiony feel to this setting; I'm just using the rules for psionics in place of magic. If it helps, consider it magic that just happens to use the mechanics of psionics instead.

I'm leaning towards making another nod (I actually do this frequently because I like some tropes and conventions of the genre) to the Dying Earth idea; the setting is an ancient, tired world, not a vibrant, young one. Civilizations are old, decadent and decrepid, people are depraved and sensualized, and the setting is, to attempt to coin my own phrase, a "romantic dystopia"---the kind of dystopia that one might actually want to visit because, hey, at least it's adventurous, dangerous and exciting rather than tedious and dull.

The Dying Earth subgenre was named after Jack Vance's own Dying Earth stories, but Clark Ashton Smith had previously charted the territory with his Zothique stories, and heck, even H. G. Wells' The Time Machine is an early herald of the subgenre. Although dark, and suffused with a sense of doom and futility as the setting may occasionally be, I want it to still be firmly sword & sorcery too; the world may end when the guttering, cooling sun goes nova, but right up until the end, life carries on, and action is the order of the day.

Anyway, anyone with any ideas for how to develop this further, feel free to drop me a line. Frankly, for this setting, I'm more working off a mechanics idea rather than a setting idea, and that's not nearly as interesting. Although I really like the mechanics idea, I'm still struggling to develop with a compelling setting in which to place it.