My only issue with the turn off encounters option is that non-seasoned players may get caught in a scenario where they are too low-level both to defeat bosses and to grind EXP by going into any of the available normal encounters.
Aside from that I think the feature to turn off encounters is a wonderfully bold inclusion. Besides, I think a large portion of people who play FFVII already know the game well enough to manage properly with the levelling.