Allowing students to retake a course on a one redo basis per course is a good idea. Not everyone learns at the same speed, even students with similar IQ's and aptitudes have different learning modalities. Students are in the formative years of their lives and full understanding of a subject is more important than how quickly it was learned. Kids deserve a second chance to prove themselves in the educational environment.
I think that this policy what be a great idea for schools to adopt so that students can fully understand a subject that was difficult for them. But I also think that the previous grade that they got some not be deleted as a reference to what they got the first time they took it. It could be misleading making the student seem smarter when they actually they took the course multiple times.