DM: Storytelling style! (PF, but whatever)

So, I have this idea for a new campaign I will be running soon for pathfinder, but could be used in whatever. Kinda inspired (read, stolen) from the format of dragon age 2.

The party plays as boring humans with no class, or commoner, or another non-caster NPC class. They exist in a "Modern Era" that is whatever time period is comfortable. I am going to make it a kind of dark ages but with guns, and basic tech. The story is, long ago all the magic was stolen from the world.

So our heroes, somehow, will run into an old gypsy who will tell them a story, for a price of course. The story she tells will be about the grand adventurers of ages past who unwittingly caused the death of magic. These will be proper PC's, swords and spells, you know.

Basically, I feel this format could be quite helpful in DMing. First, it gives me a good reason to introduce "Hero points" to the characters. They will be fluffed as the storyteller in the game embellishing the tale in favor of one character.

Second, it lets me drop outright spoilers to advance the plot. As the story is already known to the gypsy, she could easily say something like "Meanwhile, the BBG was up to no good..." and segway into what he is doing. Heck, maybe let my players be them for a while.

third and what I feel is most important, at least part of the game is pure RP. The modern age will have tie ins with the ages past, but our modern characters will likely never have real stats. They will just be commoners, trying to get by.

What do you guys think about this style? Could it be fun? Any ideas on things I should avoid or cool ideas I could add?

Perhaps have the gypsy actually be a God in disguise, who empowers these normal people like dungeon master from the old dnd cartoon? Have them begin to develope powers themselves as the story "game" continues, powers that they must hide from the rest of the mundane world until the gypsy tells them they are ready for thier quest

sorry double post

I like that a lot, actually. The twist I would add on to that is the party wouldnt know they were getting powers. Like, if someone is playing the epic rogue in the story, they would suddenly be able to fade into the shadows or do a badass flip when they need to, without any real training or explanation.