I like the idea presented, but I fear that the reward for the increased difficulty is ... off. Dungeon iLevel sets don't last very long as it is, and them having five extra materia slots would not entice me to run content that, in all likelihood, would involve some wipes. Remove the Nightmare Echo and increased materia reward, then give it a Tome buff, and suddenly I would like it a lot more as a more varied attempt at capping Tomes (which, in my opinion, this game needs to address).

If, however, you're looking at challenging 4-player content, the reward, in my opinion, needs to be at a little below savage raid gear before I would even consider it.