This would not lessen the quality of searches for users. The fact of the matter is there are many other directory systems that have this ability. You could set it up where the promoted section is above the standard results and show when the search query is within a specified distance (ex 10 kilometers) and will be shown in premium section above normal results. If you would like examples I am sure I could find at least half a dozen quickly.
This is an element that is important to enable website owners to enhance the business side and generate more revenue. The #1 reason why a listing owner would want to upgrade is to have more exposure for the listing. More photos, more text, ability to load coupons, are all irrelevant for listing owners as benefits if they do not gain additional people who view all of that.
All in all, the lack of ability to promote premium listings in a way that listing owners find worthwhile so as to spend money on has to be the #1 deficiency of this system. In the end if website owners cant use your system to earn more revenue then all the other benefits of your system are mute.