I think. Is good meant, but bad made. It works, when you restrict yourself to don´t use all spells in one ore two encounter. So instead of 3 or 4 Fireballs you cast only one of them, then maybe some lvl 2 and 1 spells and then your magic missles per encounter ability. But this works only, when the enemys are not too strong.
The point is, the player need to restrict himself and this will never work for all players.
Instead they run all the way back to buy new supplys and this is a huge timesink. Maybe some of them will change her gameplay, to overcome that issue and use not so many spells. But to think, that all players will follow that way, is only a dream.
Even then, when you now it, the system hurts you, when you want some tough fights. Its not really fun, to make some content with low lvl, when you must run so many times back. It could be create fun, to find ways to beat that content with your tiny lvl, but it cost you many time.
The system, as it is. Limit the player to play one gamestyle, instead of using different one. Yeah you can play the other ways, but they hurt you, with a great timesink.