I think I like this - it seems pretty solid, allows for flexibility but has reasonable constraints.
The biggest problem I see with allowing flexible retraining is if people use it to completely change character concepts, and generally abusing these rules to min/max. I think it's important to make a very clear and obvious note that the intent of these rules is not to optimize your character beyond recognition - it's to make the stats of your character align more closely with your concept of the character, by using options which did not exist (in L4W) when they were created - and that abuse can and likely will be dealt with appropriately. I don't count it as character continuity when everything about the character but the name and XP are different, for example
Now, I probably sound a bit like a wet blanket in that there paragraph. I totally understand what's being talked about, and why people want it, and I would like to see something like this for people who need it. I'm sure that all of you have the best intentions at heart, so it shouldn't be a problem. But the potential is there, and I would prefer that we have some way to stop/prevent it.
I think that with retraining of any significant scope, especially when it isn't at a level-up, should have to be OK-ed by the judges, and their DM if they're in an adventure. It does put a bit more strain on the judges, but it shouldn't be too much. It doesn't have to be a full CS with stats and everything, just the names of what's being swapped with what. Thoughts on that?