This is a pretty interesting strategy that I never would have considered. I believe the AI will offer you 10g/turn of the deal (so 300 gold on standard speed) so it's not a bad tradeoff. One luxury = one scout or warrior, or almost one worker.
Personally, I'm finding that surplus happiness is pretty handy for getting golden ages. I hit my first golden age in my current game when I only had three cities... it sure helped get those libraries and whatnot in place.