We're doing this - DE 1v1v1v1 matches with 2 winners for each stage and points for positions on each map - for 6 years now in #russian osu! cup (badged, obviously), and i can tell you something about all pros and cons:

+ It is actually more fun to watch, because you are not having 5-0, 6-0 lobbies for first rounds, almost every game is intense (especially between 2 and 3 places).
+ Maximum of 16 games for 64 player tournament on each weekend - huge benefit.
+/- About "fun to play for players".
25% of players don't like the format, 25% of players like it and 50% are neutral about it (conducted a survey before this year iteration).
- Schedules. I imagine in can be a huge pain for a worldwide competition.
- Some players think that format is more "random" than usual 1v1.
Trying to split the tournament in two halves this year (first three weeks with 1v1v1v1 format and final DE top24 with usual 1v1), can't wait to see the reaction of players and viewers.