With a game this heavily based on RNG in almost every single aspect of gameplay, this is only a good idea, not a bad one.

Losing 5 games in a row because of bad round 1 starting positions or losing a 5 stack to a 2 stack? That's not the hallmark of a 'good game', especially if you lose points for it.

Then why not disallow someone with a great start from finishing first? Should they have an automatic 2nd place flag?

It is all random, so it will all even out in the end. The only difference in points will be did you recognize to take advantage of your starting position (and obviously the board, etc, etc).

No offense, but this seems like a super silly idea as it would completely change the outcomes of randomness. :)

I've been around a while and I don't remember it ever happen to me. Want to say: It's really rare and even rarer on higer tables I assume (because players don't spread as thin).
Yeah, it can be frustrating but what others tried to say: even with 1, 2 or even 4 terrs left at the start of your first turn you can already be screwed up enough for 6th or 7th. Having no terrs is not a suitable difference to mess with the scoring system.
The game is based on luck. Deal with it.

eliminating someone in round 1 is an incredible feat if your able to pull it off i think its fair that the eliminated person shouldnt be rewarded, also this already exists but only on zero tables,

Oh and to add another thing... Ive won many games with 1 4 stack.. either by people flagging and the winner lagging out or just growing an 8 stack and wreaking havoc.. bad starts will happen, take advantage of them