Weirdly enough I just started an FM game with this exact idea: I took all the youth and reserve players and put them together in a Championship B team.
I think it's a fantastic idea for us however it's not at all fair on lower league clubs. If everyone brought in a B team, 5/6 of the spots in the Championship would be taken up with the fledglings of the big PL clubs. Also, imagine Lukaku (an 18m striker) playing in the Championship or League 1. You It's ultimately'd have to imagine he'd wreck them, which is rather unfair when a lot of clubs at that level have entire first XI's that cost less than a single one of our players.