We tried something similar, but found it was a bit too strong. The reason was simple: in the old rules, adding a new domain through Feat or Prestige Class wouldn't really help much. But with this change, it helps tremendously; if someone has four domains through PrCs, then they can be the equivalent of a Sorcerer who knows 5 spells at each spell level just by filling every level up with one spell... and they'll still have the higher HP, armor use, better saves, better BAB, and so on.
I'm not saying extra Domains are commonplace. But, it's just an example of how something that was relatively harmless under the old rules suddenly becomes unbalanced.
So, the way we did it was this:
Just like before, at each spell level you get one Domain Slot. Each day, you can pick any Domain spell to put in that slot; it can be a metamagicked version of a lower-level Domain spell if you want, but the metamagic is applied BEFORE memorization.
But, that's not a slot you cast out of; the spell in that slot is the spell you swap for. So, if you want to trade out a 5th-level spell, you HAVE to trade it for whatever spell you put into the level 5 Domain slot for that day. No metamagic can be applied at this point.
Basically, you still have STRATEGIC flexibility, in that you can change which spell you trade for. But, tactically, you aren't really approaching spontaneous-caster flexibility, any more than a current Cleric is.
We also added a couple other minor rules:
> Domain spells can violate alignment limitations. So, if you're a Good cleric whose neutral god includes the Evil domain, you can still swap for those spells.
IMC, we also said that all negative-energy spells (Inflict, Harm) are Evil and all positive-energy ones (Cure, Heal) are Good, so this allows evil Clerics to heal.
As a flavor addition, we have counter-alignment domain spells act a bit more... conspicuously, to make it clear this is normally not allowed. Evil healing spells leave scars, and so on. Nothing that affects game mechanics, though.
> There's a feat, "Domain Preparation", that allows you to memorize domain spells into normal spell slots at one spell level higher (a second feat, "Advanced Domain Preparation", drops it to equal level). But, these spells are still alignment-limited.
> Also, add a feat to allow metamagics to be applied to the spontaneous spells.
> Most gods have 1-2 more domains than they used to; Healing has become a bit more widespread, for instance. Also, we reworked Paladins to use a Domain-like system instead of the hard-coded disease powers, so there's a couple new domains for mimicking the old Paladin and Blackguard class abilities.
Anyway, it worked just fine. Clerics' domains were new really important; if someone said they were a Fire Cleric, chances are they'd be throwing lots of fire spells around. But, this wouldn't automatically make Sorcerers or Wizards worthless.