I had a game with the similar idea in my 2x86, like.. uhmm... dunno, 18 years ago ?
The name of that game was.. Zsomething. Really addiciting game it was. However this idea has drawbacks in a browser game. It would be best to go for a flash game to fully utilize this idea. If you are to keep to a browser game, consider adding some items perhaps, alongside with a market and also go for a pvp feature where players will use level earned from the dungeon.
All in all, seems like a good start. Keep it up