This certainly would work well. The whole double bonus/penalty thing for size differences is just redundant and hurts the game. At the same time, it is better for game balance and variety to do things this way, rather than through giving big creatures innately higher strength and small creatures innately lower strength.(Broken record...) I like how Fantasy Craft did their races. They include both Giant and Ogre as PC races. The biggest reason they work however, is that the core system removed the Size = better combat (Atk/Dam) problem that d20 had.
Large creature's STR being better than other races is represented more as the ability to carry/lift more rather than bonuses to attacks & damage. Thus a STR 14 giant fighter is equivalent in attack/damage modifiers as a human fighter with the same STR. However, the giant can lift/carry 5 times as much and has other benefits (and penalties) due to their size.

(Dungeons & Dragons)
Rulebook featuring "high magic" options, including a host of new spells.