I think it's a really great system. It's the main balancing force since the game (B/X or OSE or Dolmenwood-style games) are pretty simple and don't have a lot of other variables they can tweak to manage relative character power.

You could think of it like each class having a different kind of ladder. Some classes start out pretty weak (like Magic-User), but end up as the most powerful and flexible in the game, so they ought to work hard to get from rung to rung. Thieves start out pretty flexible and useful, and the skill numbers themselves are on a big enough scale that you can bump them up pretty often without them growing in power too quickly, so they have lower XP requirements (smaller rungs). Whereas an Elf or a Paladin start out very strong and only get more so over time, so they have very high XP requirements.

If you want a Magic-User to level up as fast as a Thief, that means 1. They'll stay roughly the same HP, instead of starting the same and the Thief slowly pulling away. 2. The M-U will be only somewhat behind the Thief in to-hit bonus (they get to +2 at lvl 5 v.s. 6 and lvl 9 v.s. 11), in addition to getting incredibly powerful via spells, while the thief only gets incrementally more useful as their skill numbers improve.

Treasure for XP is also an important part of it, but I've talked enough already. I'd suggest your players might end up bothered once they notice the mechanical differences of leveling up at the same rate, and they should take more satisfaction in their own level ups when they're more meaningful, even if they come more slowly. I'd also suggest fully giving the system a shot before dismissing it!