We've eliminated dumping by not allowing traded players to be kept. Keeper salary inflates 5 each year kept. Dumping is gone, but so is almost all trading.
At one point in time, I suggested this as one of the draconian rule changes I league would have to make in order to eliminate dumping and not just limit it. So I'd agree that this wrinkle would definitely work. However, as anonymous points out, it would also get rid of a lot of trading.
I do wonder, though, if teams in some leagues would be more inclined to make fair deals. In every dump league I've been in, there are always otherwise fair-minded owners who "wait for the dump" to take place. These owners can receive a completely fair offer that will help out both teams but refuse to make the deal. "Why make a fair trade" these owners will argue, "when I can wait for two or three weeks for the last place team to trade me 4-5 of his guys for fifty cents on the dollar?"
These owners have a point, though I always believe in trying to improve my team by any means necessary, even if that means making a "straight" trade.
Anonymous also mentions the idea of a keeper's salary increasing by $5 per season. I've never played in a league with this rule, but my intuition tells me that I prefer long-term contracts. While it is true that you do gain a little bit with this rule, I don't like the idea of a $1 player theoretically turning into a superstar over time and being kept for six or seven seasons. In most long-term contract leagues, three years is usually the longest term a player gets a contract for.
I've addressed dumping on this site many times before, and I'd say that's my biggest stumbling block against rules like this. I'm not thrilled about dumping, but I do like leagues with a lot of trading, and I wouldn't like being in a league like anonymous' where there is little to no trading.
For some, though, dumping is so odious that they'd rather quash most trades and not have to deal with the sickening feeling that you're going to lose because a second division owner overvalued Matt Garza.