I have not read all the comments but here is my thoughts.
It seems fine to me. I will never use it but there are time my wife will see me playing a game and decides she would like a go but she is not into any fighting bits, example, Zelda : Twilight princess, she likes the puzzle solving and exploring and the story but has not got enough skill with a game control or the desire to learn how to fight battles with it. With this new system she can play the game how she likes.
I also agree that it give the developer the option to keep levels challenging for the experanced player as any one else can demo through.