Update: we have been playing with this rule for a few sessions now, and so far it worked well. We are running a conversion of The Skinsaw Murders by Paizo.
The first fight run like this was against one elite (that started in the PCs room) and a LOT of minions outside trying to get in. Defeating the elite ended the treat of the minions. In this case, I should probably have used a Solo - the elite simply wasn't tough enough to make this a challenging fight. On the other hand, it was quick and established the mood, which is usually good in my book. (This encounter is a noncombat encounter in the scenario as written).
The second fight was at a farm overrun by ghouls. In this case, massive numbers of ghouls. Due to a slight misreading of the rules, this was very close to a total party kill, but a very tense and exiting fight. The level of the encounter was impressively high, but mollified a little because the ghouls came in waves. Individual ghouls were weak, but their stacking conditions made them very scary.
This led on to another fight against a smaller number of more powerful ghouls at the farmhouse itself, which proved to be pretty much a wipeput because the players got the initiative and were able to maintain momentum, killing ghouls more or less one-by-one.
Play then proceeded to the main haunted house, where we had an interesting running fight through the whole building. The PCs were trying to follow a revenant moving through the house, defeating or sneaking by any monsters she passed on the way. This worked, if only barely, and it would absolutely not have worked using original rules.
Then we had a boss fight. Because of said reveant attacking the boss and doing massive amounts of damage, the main villain was easy. Because some of the monsters from the last encounter were still around and chasing the players, it was still an interesting encounter.
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Overall, the effect is much as I anticipated it; area attack are more important, fights are shorter and deadlier. So far, I like it.