I think the OP's suggestion is good at avoiding the 5MWD, assuming the PC survives the unconscious "timeout;" or rather avoids it at least as well as the current rules do. But I'm not sure it avoids the death spiral, as others have pointed out. Then again, the base rules have the PC go unconscious, with all its attendant penalties, upon reaching 0hp, so it could be argued that the current rules are death a death spiral, as well as wac-a-mole like. In a game where there was a tacit understanding at the table that adversaries will
generally not attack downed PCs, it could work. There needs to be some disincentive to reaching 0hp, after all. There are a couple of problems though.
- Retreat becomes even harder if you have an unconscious companion to worry about. Perhaps the intention is to have PCs retreat before 0hp is reached since they know wac-a-mole is not an option, but that is not always avoidable or predictable.
- losing 1/4 (or a different fraction of party actions and strength) is really sort of a party death spiral for the encounter, when you think about it. If the encounter is that close, having all that action economy go way for the combat can be devastating, that's why "focus fire" has always been such an effective tactic for PCs to use after all.
Personally, I'd be okay with the suggested implementation, at least on a trial basis.