Downside to rebuying. If you get to keep your pool the rebuying is a lot more of a freeroll and as such would be done more often.

I don't think this could ever work with paper Magic because the registration time would be endless. If it's a pure thought experiment with GP level prizes, I'd say players would re-buy once every 3 pools or so. This is assuming you do not get to keep your original pool and the fee is around $40.