In my team we do something superficially similar, but instead of rebasing we just merge changes from master into our feature branches whenever master is updated. This seems to result in fewer conflicts for us, despite what you might expect.

Also, when the feature branch is to be merged into master we do a squashed commit so that all changes from that branch show up as one commit in the main project history. The feature branch's commit history is preserved in the repository (thought not in the master branch), so it's not really any more difficult to roll back partial changes.

Our situation is likely different from many projects though, as we only ever have one developer working in a given feature branch.