Our town has done this for a few years now but only during the holidays. i think we call them "Holiday Bucks". I don't see why this is a bad idea at all. It does exactly what they want it to here. I think many of the small businesses in town would be gone if it weren't for it.
I see it's uses and drawbacks. Great for local businesses. Yet how many times would you be left with a few funny dollars in your pocket you didn't get to spend?
Every time I went to Canada and exchanged money for local use I ALWAYS seemed to come back with a few dollars in Canadian that I just didn't deem worth taking the time to exchange back. There goes your 10% discount.
Not only that but since the "holiday" money would be of much lesser quality currency it would only take a weekend for some able few to quickly and accurately counterfeit it thus HURTING the ones it's supposed to help.
You'd be amazed at the quality of todays laser printers. I mean even the micro printing gets picked up today. At first glance with the right paper.........