The extra action is helpful if you want to play the second action as a terminal draw, but you're right that it makes it kind of powerful. Also, I would have to come up with a different name for it.
I mean finding a good name shouldn’t have the highest priority. You could name it Travelling Lodge if you like.
I try to use a wording that's similar to that of Overlord. I don't have the Alchemy or Empires expansion, so I don't have too much concern (maybe not as much as I should) of weird cost compatability.
Just an example of different costs. Village costs $3, Familiar costs $3+Potion. If I interpret your wording and intention correctly, than you could play a Village first and then choose to follow the instructions of Familiar, which is quite a nasty attack card, usually restricted by the need to buy a Potion first. So, in short, you should keep such things in mind.
There are many cards that have poor interactions with weird cost cards, and most of the cards with weird cost you want to play for their original instructions anyway. That's also why I want to make the changing of the effect optional. I considered a wording like "Instead of following its instructions", but when you put "you may" into it it is unclear if you get any effect at all if you don't want to play another card. "Instead of following it's instructions, you may" can mean either that you may follow its instructions OR that you never follow them.
If you want the instructions optional, just delete the part “different name” (“another”), then you can play the same card, just from the Supply (if it isn’t empty).
I also wanted for you to be able to make all of your Action cards into villages, and considered removing the draw, but a cantrip version maybe would be better?
I don’t understand what you mean with this. Why do you want all cards to be Villages. That seems to be an overkill and quite boring too.
How about (without
any Vanilla boni):
You may play an Action card from your hand.
Instead of following its instructions, follow
those of an Action card in the Supply,
costing the same or less.
This is more or less what you want I guess (except the Village part, but I totally disagree with that) with some minor differences (e.g. empty pile). If you prevented all kinds of loops with that wording, I don't know.