AdM, the wholly understandable problem that people have with this set-up is that these experienced pilots are far more likely to have wife/kids/mortgage and are therefore unable to accept the job offer as-is even if they really wanted to come and work for us.
While I think the current arrangement is entirely appropriate for cadets joining the airline, I think it is utterly inappropriate and frankly embaressing to offer the same terms to experienced pilots.
It also seems to serve no purpose, unless you can think of one, other than to let these people know who's boss.