Most free actions must occur on your turn, so no, the Dwarf cannot draw his shield
I quoted 3.5 in the other question, but since you're not interested in that, I'll stick with a reading of the Pathfinder PRD:
Combat Round:
In a normal round, you can perform a standard action and a move
action, or you can perform a full-round action. You can also perform
one swift action and one or more free actions. You can always take a
move action in place of a standard action.
Free Actions:
Free actions don't take any time at all, though there may be limits to
the number of free actions you can perform in a turn. Free actions
rarely incur attacks of opportunity. Some common free actions are
described below.
Great, free actions are quick. What's speaking?
Speak
In general, speaking is a free action that you can perform even
when it isn't your turn. Speaking more than a few sentences is
generally beyond the limit of a free action.
(Emphasis Mine)
So, why is there a special clause for speaking that says you can do it when it is not your turn if you can take free actions outside of your turn? This clause does not come into conflict with "You can perform one or more free actions while taking another action normally.", which is simply a clarification that "Sure you can drop your sword while attempting to climb the rope while shouting at your Dwarf companion to get his shield out"
How about immediate actions?
Much like a swift action, an immediate action consumes a very small
amount of time but represents a larger expenditure of effort and
energy than a free action. However, unlike a swift action, an
immediate action can be performed at any time—even if it's not your
turn.
There again is the special emphasis that it can be done when it is not your turn. This further implies that most actions can only be taken on your turn.
Paizo, to my knowledge, has not commented on this because it is the same as 3.5, and this has already been covered in a FAQ by the 3.5 designers. Since Pathfinder is an improvement on 3.5 and doesn't change the rules wholesale, why would they comment again on this?
Source? Pathfinder PRD combat section.
And for those interested, further discussion on the 3.5 side of things here: https://rpg.stackexchange.com/a/8896/1736
Edit
And to counter a point from your question:
This interpretation also makes sense stylistically, as a character
should be able to take their usual free actions while already reacting
to another character, such as drawing a shield while intercepting an
attack or loading a crossbow with rapid reload while making an attack
of opportunity.
What about during the surprise round? Say someone botches their perception and is about to get shot with said arrow. Totally unaware. Should he be able to whip out his shield then?
I think it's just to ensure that PCs can only craft items during downtime.
It forces you to take a full day out to craft small items. The one day minimum helps prevent weird cases like:
- Three scrolls taking the same time to scribe as one scroll
- Crafting twenty feather tokens in one day
- Scribing an unused spell into a scroll before you go to sleep, just to avoid wasting it
- Crafting an item casually in an hour, without taking a full day of downtime
Other than that, there are no major balance issues. The amount of downtime isn't specified in the rules so crafting isn't strongly balanced against it as a limited resource. You're still spending your own gold to craft the items. I think your house rule would be reasonable.
Remember also that you're already limited by the number of spells you can cast per day: you have to cast each item's prerequisite spell once each day while crafting. To craft five feather tokens, you'd have to prepare major creation five times (or hire someone else who can, or cast from scrolls, or raise the item creation DC).
Edit: Another reason is to simplify item creation time down to increments of whole days.
Originally in D&D 3.5, you couldn't craft items while adventuring and even small items took a full 8 hour day. Pathfinder eased those requirements, but kept the 1/day limit. One benefit is that it divides item creation into whole days, which is simpler than tracking individual hours. It's not overpowered, just a restriction Pathfinder inherited from D&D 3.5.
You can remove the 1/day limit if you're willing to handle the extra complexity.
Best Answer
Historically, it’s because Paizo decided that Rogues (the ones most likely to take the feat) shouldn’t be so “good” at using such “magical” equipment. See also the ruling that alchemical weapons cannot be used for Sneak Attacks.
It’s more of an “image” concern. There really wasn’t any particular balance concern: Quick Draw was never a particular popular feat, nor was it ever especially powerful. The ability to pull out the appropriate wand, or at lower levels, the appropriate alchemical item, was a useful side-facet to the feat but rarely a reason to take it by itself. Remember, Quick Draw does not give the ability to “quick sheathe” anything, and in fact that’s not an option offered at all in either 3.5 or Pathfinder, so particularly with wands, after you’ve activated it, you need to do something with it before you can use another weapon. Dropping it is a free action, so that’s an option, but it has serious risks since that’s a valuable magical item you’re leaving on the floor.
But Paizo decided that it didn’t think Rogues should be using such items so much, despite the fact that an optimal Rogue will use them quite heavily. That’s the “balance” concern: not that it makes Rogues too powerful, but that it’s too frequently a better option for Rogues than “traditional” roguish weapons for Paizo’s taste.
Unfortunately, I am unable to find the original discussions of the alchemical weapons and Sneak Attack nerf, where this was hashed out.
Note that all of this was done before the Alchemist class existed. While there was no balance problem for the Rogue with respect to Quick Draw and alchemical items (as can easily be seen by the lack of balance problems due to this combination in 3.5), it is possible (though I doubt it) that there could be with the Alchemist. However, keep in mind that neither 3.5 nor Pathfinder is tightly balanced. With or without this nerf, the Alchemist is stronger than the Rogue and weaker than the Wizard. Thus, you can houserule this particular combination, and while it will improve some classes relative to others, it won’t improve them so much that it actually changes which is more powerful than the other.
Personally, this is one of many changes in Pathfinder that I houserule. Several other houserules are also aimed at improving Rogues’ lives (like the ability to Sneak Attack with splash weapons), because they need it.