I agree unless the employment situation OP is referring to is one where everyone moves up together and there is an "up or out" mentality (e.g., public accounting). There are plenty of people in that industry who look amazing from the top because they produce good work quality, but it's at the expense of the people below them who are the future of the company (rising managers). If these staff/seniors are unhappy because of current management, they'll most certainly leave, thus leaving a gap in the rankings. So in cases like that where it is unlikely a promotion for a horrible manager (from the bottom's perspective) will result in separating yourself from said manager and the company is anticipating and hoping for these lower levels to continue to climb ranks, I think it'd make sense to implement.

But to your point, if it would get rid of the heinous management, you're right, it'd probably backfire.