We've actually used this in home games, and it works as suggested: non casting get full progression, casting gets casting *or* class abilities (like feats and whatnot), Partial casting is full casting.
It's made some interesting combinations, and really opened up our options.
*However*
This is not for the faint of heart DM. We end up with high powered characters that end up taking a great deal more adaptation and creativity on the part of whoever's DMing. It helps that we tend to run story oriented plotlines, so you can still make major mistakes that aren't stat based. This is not to say we don't have combats, in fact every session has at least one major fight (lasting a few hours), or several small ones, but combat has been relegated to making money and furthering plot, not the be all end all. It evens out the difficulties somewhat, but is much much more DM intensive.
For a full group, and a good one, it's great though. Having run a few campaigns using these rules, the sheer amount of creativity and alternate ways characters get built is a joy to watch. It's like kids with a limitless source of craft supplies. As long as you can spray the mess down afterwards, it's a blast.
Why would you want to break it? I think pretty much everyone can agree it can be easily broken, and that's just by looking at the concept without running numbers. Considering Punpun doesn't even need this, I would think the "challenge" of breaking it is pretty much a given.
Edit: yes it's advancing base classes, not PrCs.
