I too know of a site that applies this "punishment" and I detest it. It's not uncommon for me not to even go to the site for a few months and all my scores have seriously dropped, despite that I didn't suddenly get that bad at the games. (Over time you can lose some ability in a game, but not that drastically in a few months, if at all.) Fortunately when you play again, it internally knows where your score was and you're back to normal again.
There's several reason for this being a bad idea, some of which are already stated:
*It's not a fair score to match up with other players and the results aren't fair.
*It can keep someone out of a game they actually do qualify for.
*Sometimes people simply get burnt on a game and need to get away from it for a while.
*Even if it's "just" 1 point a day, if someone knows 30 games and can play one game per day, they'd basically be losing 30 points every month and gaining, what? How do you build ELO that way? And people can't necessarily be on here every day. Some people only come occasionally so why should their ELO's all drop into hell?
*The whole concept of forcing people to play certain games if they care about their ELO is not fair.
*And it is completely, totally and in every way BAD for anyone who plays turn-based.
If the ideas is just dealing with people who refuse to play a game and stay at the top of the charts (which doesn't even particularly bother me), surely there's a better way to deal with it than punishing everyone and forcing them into playing particular games.