I'm fine with an incentive-based system like this, but I'd focus on those binary mechanics that are already monitored and given advice by WoW. ie.. "Oh you stood in fire there, you should move out of it." and if none of the things fail, and dps/heals are ABOVE a certain point (ie... ranking doesnt matter if you're doing close to par dps.) then award a lesser charm or two. NOT MORE LOOT and DEFINITELY don't adjust the base loot drop chances.