Weena is exactly right on the possibility of cheesy exploits, especially by D1 teams who want to carry over that last scholarship on the cheap.
We can complain all we want about the "caste system" this creates, but how is it that different from real world hoops? You'll have your outlier Dennis Rodman D2 player every few generations, but by and large the real talent difference between D2/3 and D1 is even worse than it is in HD. At least the HD system allows for a little bleed over, some blurring of the caste lines.
I can see more new D3 players blowing their budgets in futile efforts to sign players over their pay grade than I could see D1 teams dipping down into D3, or even most D2 recruits. D1 would gain nothing, and D2/3 wouldn't gain enough to make it worthwhile IMO.
My question back to tanner is "What would be gained with your proposal over what is already in place?"