Putting all the bad players together is a punishment. You will be punishing people who don't know any better and according to your system will be informed by suddenly being put in the poop-pile to learn from other poop-denizens.

How hard will it be to climb out? do you really think SE will want to lose all the free-riders ? they may suck but they are a constant inflow of money into SE's coffers and are just as valid a player as you are. They WILL leave too if all of a sudden they have multiple wipes and people leaving because "you guys suck". Not to mention the horrendous DPS queue times as you have to have people in YOUR tier available instead of just anyone.

I'm thinking nah on this one. I can deal with one or two bad runs a month, which is what I get. Games fine.