How many times on this website have we seen people complain that they are being moved too frequently? Either it screws up their personal circumstances or it screws up continuity for the post itself.
As has been pointed out, there always has been an unofficial 2-tier system. If you didn't know which tier you were in, then you were in the lower one! But the RAF continued with the pretence that everyone had a fair shot at being CAS and thus needed to be moved every 2 years.
This seems a genuine attempt to give people stability, while still providing the rapid movement that is deemed essential for those destined for the top (tho' I'm not convinced such rapid rotation makes for a good senior officer - maybe that's why so many of them just go round in circles).
Yes, some people are going to be hacked off with being labelled. But hang on, the first thing we do when we meet someone new is look at their shoulders and then look at their chest (unless she's female, in which case the order is probably reversed). We've then instantly pigeonholed them anyway!
Ultimately, the idea's not a bad attempt - a solid B+, Yes. But the real judgement on whether this is a Mong or a Chisseler of an idea will be based on the detail of its implementation.