It might be a good idea for another kind of game, in my opinion, but not for The Witcher 3. In a story-driven RPG I expect loot to be a part of the story itself and tell one of its own; ideally, every armor or sword should be found where it's found for a reason, its holder or guardian monster should have it for a reason and its effects should be coherent with its background as well (as a straightforward example, a foot soldier's breastplate should not give you a huge boost to witcher signs), even if it's not something very elaborate. Just a little bit of background, but it should be there.
For more common items, it sounds too much of an effort just to give you stuff you could easily make yourself or buy at a shop. So, as I said: it's a nice idea, it could work in another kind of game, but it doesn't fit The Witcher for me.
For more common items, it sounds too much of an effort just to give you stuff you could easily make yourself or buy at a shop. So, as I said: it's a nice idea, it could work in another kind of game, but it doesn't fit The Witcher for me.