I like the idea! and you're certainly not the first one to think about it. The best example I can find is the linux kernel itself that can be tweaked dynamically from userland using a filesystem.
There is also the WMII window manager that work this way iirc.
On the paper, it is great.

In practice though...

Typing words in a file is easier than creating a whole tree, ir navigate it.
Sharing snippets online is also much easier than tarballs of your conf.
It is also worse performance wise, as you get much more overhead due to high IO.
The one main advantage I see though (and a huge one!) us dynamic reload on specific settings by monitoring the filesystem, which you can't easily do with a single conf file.