As long as their solution for lower-level dungeons is balanced properly (which will be a challenge, and anyone who says otherwise is misunderstanding how the squish will work), then it solves more problems than it creates.
If you're super-worried about "feeling" weaker because you kill a mob in 3 attacks that do 2000 damage instead of 3 attacks that do 200,000 damage... just make an addon that multiplies damage you do by 100 before it displays it.