1st overal (however i play in keepers, not dynasty)
It's a great way to keep the league competitive, and ensure that less teams get cheap wins at the end of the season due to apathetic lineup management etc.
Most leagues lottery the picks anyway. Why not allow those lottery teams to compete for the brass ring of a 1st round pick. only done this one year so far, but it MASSIVELY increased league participation, roster mgmt etc by the 'out of the money' teams. Plus it sucks to miss the playoffs, makes it nice to have a reason to still get excited for wks 14-16/17 (18-20?)
fwiw I won said league, so I was out of the running entirely.
one caveat: tweak that we did, was that week 1 playoffs included the 4 non playoff teams (10 team league 1/2 week 14 bye). in a week 14 battle. the winners of those matches faced the losers of the week 14 playoff matches in week 15. with the winner of those games meeting in the battle for the first pick bowl. (eventually won by the team that finished the year 8/10 (4-9) over the team that finished the year 4/10 (8-5) by 32 pts. Not only that but the TB teams in many cases put up better #'s than the playoff teams, in large part due to their efforts to finish strong rather than fade into apathy. It was also felt (rightly so IMHO) that in the past teams had purposefully been neglecting their lineups so that they would have more 'ping pong balls' in the draft lottery.