Every once and a while I see a system like this, either as a GM's house rule or as a core mechanism for a non-D20 game. I always cringe, because I played with a GM who used these rules for over a year, and hated every minute of it.
The effect on combat was to sloooooow everything waaaay down. Each round you'd declare initiative, then you'd have to go through initiative declarations, and then resolve things. Way too often you'd run into situations where you would lose your actions in a round because what you initially decided to do was rendered moot by other characters' actions. I think this is one of those ideas that sounds great in theory, but in practice it is awful.
To give you an idea, in a moderate sized combat with a group of 5 players, it ended up taking us over an hour sometimes to go through a single turn of combat. That's a turn of combat in D&D, not Hero or other high crunch game!
We would also have the problem of how precise you have to be when you declare attacks. Can you simply say "I'm going to attack the nearest opponent," or do you have to specify? And what happens then when the wizard fireballs all of your targets in range? You end up missing rounds in order to change weapons and tactics. It's especially bad when you have an action every 30 minutes or so and you lose it because the battle didn't go the way you thought it would. Now to a certain extent this might be realistic, but man did it make for some bad gaming.
--Steve