In a purely commercial context this worked for some time for products like PagePlus: you would get an older version from on magazine cover disks. For many the older version was good enough to do what they needed, for others the upgrade path to get the extra features was obvious and they would often buy the newer version of what they'd already played with without even looking for alternatives.
Depending on the product I'm not sure I would trust an older version these days though. A desktop only DTP app like PP maybe, but anything online, at all security related, or just that I might put credentials into; I would have security concerns unless there was some sort of guarantee that security updates were getting back-ported. That and in a lot of cases there may well be a Free+free option as good as the 18+ month old version of [whatever].
As you and others have already stated, the straight dual-licensing model makes more sense from the user PoV (and maybe form the developer PoV too, though I expect opinion to differ more widely there).