Okay, so before I get into trying to help answer your questions (and meaning no offense to the original author) remember that this is a homebrew power. Personally I think tacking on 2 better-than-stunts (switching the skill trappings in ALL cases) as "extra benefits" for no additional cost is a bit much. IMO, if your GM even allows it it should probably be -5 or even -6.
How does metal based evo and thaum work?
That's kind of up to you. Obviously any "summoning" type effect is going to use metal (as opposed to fire evocation blasting with fire, a metal evocation might send a wall of blades; a shield make take the form of a literal shield). On the other hand, more conceptual effects (water is entropic, for instance) would depend on the properties of metal as an element. You could just go from the properties of metal or you could try taking it as Metal from Wu Xing. Wu Xing is similar to other 5 element systems but replaces Air and Spirit with Metal and Wood. Wood has strong spiritual associations but in Japanese culture (if L5R is to be believed; I couldn't find any quick support so I'm not positive) the katana is one of the few non-human things that contains significant elements of Void (Spirit) and thus Metal could be considered Spirit. I can't really say which set of associations feels "right" to me, but if you decide to go that route pick a pairing, borrow the appropriate DF associations with the given element (Air or Spirit), and explain it to your GM.
Does evocation work in concert with melee (if the focus of the magic is swordsmanship based)? If so how would it work? If not how should I use magic to enhance melee or melee to enhance magic?
No. Or yes. So, with few exceptions (reflexive blocks; the question of which already has several threads dedicated to it) any sort of magic is an action and you can only perform one action per exchange. However, what this particular form of Sponsored Magic appears to represent is the idea of using melee AS magic. When you cast a spell, you're not doing either; you're doing both... you're just doing it using the mechanics for casting a spell. Another way to look at it might be the idea of "secret techniques" or ninjutsu often found in anime. And, hey, you can use Focus Items to (effectively) boost your Weapons skill above the normal possible. eg...
Death of 1000 Cuts: Attack evocation. In a normal attack you use your weapon's Weapon rating. Since you use Weapons as your Control(/targeting) skill, this is essentially an attack with a Weapon rating equal to your Power (Might); unless you choose to define it otherwise.
Blade Wall: Block evocation. In melee, you might be able to 'dodge' with your Weapons skill normally but with this you can even block incoming projectiles or magical attacks (in theory).
As for enhancing ordinary melee, the best way to do that is Aspect maneuvers. Of course, you're probably better off not wasting your magic on this since you can do it mundanely...
Overall if you just want better melee you might be better off with Stunts, but I hope the above helped give you some ideas of how magic and melee might work together.
What rotes would you suggest for this sponsored magic to work cinematically and mechanically?
The above would be good places to start.
What thaum should he use...biomancy...divination...crafting...summoning etc (I see the line about summoning spirit warriors). What would "tapping" into "legends" look like?
Erg... okay, so biomancy is a field of study. You can't do biomancy. You might be able to do some of things biomancy does, but you can't do biomancy. For the rest... yes. The real question of magic (sponsored or otherwise) isn't "What can it do?" but "How can I make it do what I want?" Divination? The combined wisdom (or ghostly senses or whatever is relevant to the situation) of thousands of legendary swordsmen. Crafting? You're probably pretty good at making swords... what might a legendary sword be capable of? (maybe start here:
http://en.wikipedia.org/wiki/List_of_magical_weapons). Summoning?
http://en.wikipedia.org/wiki/Dragon's_teeth_(mythology) http://en.wikipedia.org/wiki/Terracotta_Army It's all in the imagination.