I always rush Korthos and so didn't really see much of the narration there, but IMO this system has potential.
The question though is - can it be made to work in areas with more than one storyline? (Think the Harbor, where it's not all that clear which of the content you'd want to direct level 2 'fresh out of Korthos' types to).
Do you send them to Waterworks straight away or would you send them to other content first? If so which other content (there's no real unifying storyline in the Harbor). Or do you add more of an overarching storyline, getting people to do all the Kobold quests (Dirk, Butcher's Path, Garrison's Missing Pack, etc, skipping the horrible Kobold Assault) and culminating in a mission to smash your way into the main Kobold 'stronghold' of the Waterworks?
Where it will really struggle is the Necropolis. I can see this working really well in Gianthold, the Desert, Meridia, and anywhere else with flagging raids however. And also, I can see 'optionals' being used well - e.g. in Amrath, you have the main arc saying 'strike a blow against the Devils at each of Genesis Point, Iron Maw, the Hall of the Third Legion and whatever the Sins building is called', and then you are directed to TOD, but also get an optional appear: '(Optional): Convince the paranoid Yugoloth alchemist that you are not a spy by achieving 75 favor with the Yugoloth faction'.