[RPG] Is a fumble on a natural 1 an official rule

I'll restate your question with my words to see if I've understood it properly first.

Let's keep the math easy. ECL 2, starting level 2 (1000 XP)
You get a +2 LA somewhere during level 2, let's say right after leveling up.
So you're now 1000 XP, ECL 4 and you need to reach ECL 5 for adding your new class level.

Your DM says ECL 5 is reached at 10k XP so you now need 9k XP to level up.
You say LA +2 is like going from 4 to 5 so you need 4k XP to level up.

Your way, you gained two levels (your LA) for free.
DM's math: 0 + 1000 + 2000 + 3000 + 4000 = 10k
Your math: 0 + 1000 + ............. 4000 = 5k

Your DM is right and no, it's not like you need more XP the higher you get, because your class levels you already took costed you less than if you took them after the template, so the thing balances out. The only real imbalance comes from the fact that you get the template before paying the XP for that LA.

As for the example you quoted, I'm pretty sure that was a typo and that's 9000 XP, not 3000

My group uses the GameMastery Critical Fumble deck. We don't use it on every natural 1, but we use it on 1's when there's something else going on (in an area that's Unhallowed, for example, or in a cursed place or wild magic place or plane of the Abyss) to add to the atmosphere of threat besides a random roll penalty. It is also available as iFumble as an iPhone app. There are Melee, Ranged, Natural, and Magic options (so 1's on spellcasting rolls can have magical side effects as well).

Randomly drawn examples:

• Melee: "I Told You It Was Sharp" - You take 1d6 points of bleed
• Ranged: "Klutz" - You drop your weapon
• Natural: "Got Too Close" - Your attack hit the target, but the target may start a grapple against you for free
• Magic: "Mind Drain" - You take 1d4 points of ability damage to Int, Wis, or Cha (rolled randomly).

There's 52 cards with all 4 types on each so it doesn't repeat too often. The conditions are unfortunate but not instant death or decapitation type stuff, usually inflicting short term conditions (flat-footed, confused, dazed, etc.). Usually for 1 or a small die of rounds. Pulling some cards... -2 to AC for 1d4 rounds, sickened for 1d6 rounds, confused for 1 round... So this might be a better fumble-selection method than the current table. I do recommend trying to get him to lighten up on fumbles all the time, try to sell him on the idea of "it should happen when, you know, we're in an evil shrine or plane or someone's put a curse on the group or something, that would make it cooler."