I do peg my CPU with reasonable frequency, but You are right on with your point on I/O. Disk I/O is the bottleneck far more often than CPU is.
That said, I fear that with this scheduling scheme I will have to stop launching my headless VMs from the commandline, since they will be badly throttled while my wobbly windows wobble smoothly and my screen saver dazzles an empty room at high priority. I use the 'nice' command a lot , especially back in the days when I did a lot of kernel compiling. Nice has always worked pretty well for me. Is this patch different than auto-nicing your interactive bash shells?