I can't really see many immediately obvious downsides to it (that said i don't go to UoM).
I think things like the GPA needed for grad med applications influence subject choice. Need we look further than people taking easy breadth or electives? It could potentially extend out to subjects within majors as well (it seems reasonable to assume it does happen). So, i think this might fix that somewhat.
Assuming their methodology is right and their "scaling" isn't totally out of whack i think it'll be a little fairer. I know at monash for instance chemistry is fairly hard but biology is fairly easy, granted you need chemistry anyway but pretend it was another really difficult subject, i don't think it's all that fair that the subject should drag down your GPA because it was way more difficult than the rest.
That said, i don't think it'll make it through. There are too many fairly serious flaws highlighed in it as above. For instance study abroad units/ the transparency and one of the most important i think, say you just barely pass, what if this causes you to fail? If they leave the system fluid and let passes turn into fails its not really fair but if they 'fix' the system at certain points to present certain results, its not really fair or fluid either,