This would push users toward local posts (especially on smaller instances) while still supporting a better distribution of user engagement over the threadiverse. And if you don’t trust that it was implemented correctly – you can simply check it by counting the amounts of posts against your chosen probabilities.
Edit: changed feed name to mixed-feed
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Would you still want this if All was less of a dumpster fire? E.g. if a community like /c/Memes could be excluded?
Yes, because for smaller communities, the All-Feed would still mean that they aren't present there. They would still chose the local-feed.
It would also be nice for people who chose their instances for a reason and want them to give them a bit more attention than other instances but don't want to switch back and worth between All and Local. I think there are many of that.