I like the motivation behind this, but I don't think this is a particularly interesting solution. It's a manner of perception...If you call a fatigue system a fatigue system, then naturally players will look at it with derision. If you call it bonus xp, they'll love the hell out of it.

Similarly, you have proposed a mode where players can primarily enjoy the content and learn the mechanics without dealing with lockout. In return, no loot. The problem is, I think, calling it "practice mode." If developers announce "practice mode," then it doesn't really feel like a new content mode.

On the other hand, if developers add a "time trial" mode, with no lockout and no reward other than a weekly world announcement to the team that beats the dungeon most rapidly, it feels more interesting, no? "Hey, anyone for T2 time trial mode?" vs. "Hey, anyone for T2 practice mode?"

As far as armor fees go, in the end game it really isn't that expensive(remember that tomestone mats are still going for 15k/each).