I think Joyce has a point about non-fiction and reference type books being not read start to finish but that could be managed via different weighting and or rates per word for fiction vs. non-fiction vs. reference books.
I mainly worry that some authors would be sorely tempted to "pad out" their books with unnecessary verbiage, extraneous characters and subplots. Would that novella length work be turned into a 1000 page epic like Stephen King or Neil Stephenson are wont to do?
On the other hand, some authors may be more concerned about readers not losing interest after a few chapters and writing better books to encourage the reader to finish the book. It may also discourage the practice I'm seeing of short books with cliff-hanger endings hoping that readers will buy more in the "continuing" series.
I'm still mulling this over. I think there may be problems with books such as cookbooks and (knitting, etc.) pattern books. A reader may borrow the book for one particular entry, but flip through the whole book to see what else is included or because the table of contents doesn't describe the items well. Does that constitute "reading"?