I definitely like this idea as it makes sense. I like the idea of being able to challenge gyms in whatever order but don't you need certain badges to go to certain places? I could be wrong there its been some time since I've played a Kanto game. I'm also wondering what timeline this is. Is it the manga world? The Anime? The Games? It seems more akin to the classic Red/Blue games but more open world-ish.
And I like the 5th gen TMs method but I can see the reasoning behind the old school way as well.
Edit: I understand what you mean Red I can dig it. x3