Learn Croatian: Dobra violina uvijek treba dobro gudalo. - A good violin always needs a good bow.

The adjective dobra can be graded to make a comparative (like bolja violina). Could we do the same if it were a material adjective, like drvena violina (a wooden violin)?

No. Material adjectives like drven (wooden) or staklen (glass) describe what something is made of, which is generally an absolute quality. A violin can be "better" (bolja), but it cannot grammatically be "more wooden" (drvenija). This is why material adjectives do not take comparative or superlative forms.

Why is the verb treba used here as a normal verb with a direct object, since trebati is often used as an impersonal verb?

When trebati means "to need" a specific physical noun (like a bow), it behaves like a regular transitive verb. The subject is the entity doing the needing (the nominative violina) and the needed item is the direct object (the accusative dobro gudalo). You will see its impersonal form mostly when combining it with other verbs, like "I need to work" (Treba raditi).

Is dobro gudalo in the nominative or accusative case here?

It is in the accusative case, serving as the direct object of the verb treba. It might look like the nominative because for neuter nouns like gudalo (and their modifying adjectives), the accusative form is completely identical to the nominative form.

The word for bow is gudalo. Does the -lo ending tell us anything about how this word was formed?