I can see how this can go both ways. On one hand, it helps solve the issue with the lack of houses and businesses that are currently in the hands of more or less inactive characters/players. On the other hand it would extremely lower the variety of RP and factions, since no-one would be willing to quit their official hard-to-get-in factions, just so they could experiment with non-official ones for some passive fun RP, that benefits the entire server.
And, I see that the donators would get IG cash refund for their levels, however, wasn't that the thing that screwed up the server economy in the first place? Some people would OOCly gain a bunch of cash on their two remaining characters, dis-balancing the economy even further.
It kinda solves some issues, but causes a lot of new ones.