Does this dice mechanic exist in other games and does it have any drawbacks?
Formula D is a racing game where you select your die (non-standard D4, D6, D8, D12, D20, D30) based on your "gear".  So if you are in first gear, you roll the D4 and you can roll between 1-4.  If you are in 6th gear, you roll a D30 with numbers 20-30 printed on it.  You move forward the number of spaces specified on the die.  It also has a D20 Danger Die where specific events can happen.  For example, during the start rolling a 1 is a stall (lose a roll), and rolling a 20 is a very good start (extra roll).  It's similar to your case where you have different dice for different power-levels, and you have events where you roll critical or very bad rolls. 

Zombiecide is a game where you search for weapons and roll dice to kill zombies.  In this game you'll end up with weapons such as the Chainsaw (5d, 5+).  The chainsaw lets you roll 5 dice.  For each 5 or 6 rolled, you kill a zombie in your current square.  Another one is the baseball bat (1d, 3+).  With this weapon you only roll one die, but a 3 or higher results in a kill.  It's similar to your game where you can power-up with more dice.  It also has chances of failure/success, but not quite like you described.