I like this idea and find it interesting. I assume that lost rewards are returned back to the reward pool? Such an implementation would definitely curb bidding bot use and would encourage a more decentralized distribution to smaller accounts.

There aren't any downsides that I can think of right now. Sure, a bad actor can create a bot-net and farm horizontally, but they can do that now. This would eliminate a lot of vertical farming of rewards by larger users. I don't ever expect something like this to ever get implemented, but I think that it could be a useful addition. Although, I also want to see if someone can find a good attack against it.