Easier for you as you came up with the idea!
The way you have written it sounds more complicated than the current system we have now. I dont think they need to change the way materia works, I think they need to change the way gear works with materia. Currently materia is overpowered pushing out the rare u/u gear as its inferior to a high tier piece of gear with one IV materia equipped. This leads to no one running DH or farming HNM's as there is little to no point of doing this.
If they do change materia my idea (also mentioned elsewhere on the forum) is a system to meld materia together, so a system where 2/3/4? pieces of materia can be added together to form a better piece of materia. So something like - Strength I + Strength I (both with +1 stats) = Strength II (+2 stat or maybe random the stat upon creation?). For melding high level IV materia make it so it doesnt increase in tier only in HQ so adding 2 Strength IV together would produce a Strength IV +1. Scale the % success down depending on the tier of materia used, so lvl I materia is 80%, II 60%, III 40% and IV 20% etc etc



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