Too expensive would be my thought. Getting this stuff to perform in a consistent manner so that pups could be mass-manufactured would be much more costly than what most pup makers use today.
Too strong is a relative word. If a pup's output is too high, just jack the thing down away from the string. The worse scenario would be for a pup to cause "Strat-itis", the condition where the magnets pull the strings out of tune, if the pup is too close the the strings. If a pup is far enough away to prevent that, it might not 'get' all the tone the string can produce. Designing for this one factor is why many manufacturers scratch their heads bald - it's a tough nut to crack.
But hey, who am I to pee in your Cheerios?! Go for it! Who knows, you might come up with a winner. Just be sure it can compete on price in the market place, OK?
May I ask what your line of work is? Im so glad to have guys like you and Unk and Runewalker ( to name a few )...You seem to never be at a loss to have an answer to any problem that may arise. And you always talk to us, not down to us.
I would say rare earth magnets are much too strong and would affect the tuning of the guitar. I would think the Dimarzio X2N has more than enough power (both electrically and magnetically) to overdrive an amp. Try one out and watch your amp corrode. ;D
I don't work anymore, see my signature below. But I was in electronics for most of my working life (not all, but most), and computers during the last 20 years of that time frame. Since I retired 10 years ago, I've kept pretty busy with the "hobby" of repairing and building amps, guitars, keyboards (synth stuff), and most other professional musician's gear. Doesn't pay for much more than my strings and tubes, but what the hlll, it's a good reason to tell the wife that I don't have time to clean the bathroom today, or to hang the grandkids pictures, or to........ ;D
(But I do like to get outside when I can, so this summer I might be a bit more scarce. Not much, just a bit. )
Thanks again. And don't be afraid to call me out, should I ever get on a high-horse and exhibit a bad attitude. Sometimes my medications don't play nice with each other, and I'm blind to the fact until taken out back behind the barn, so to speak. ;D
Rare earth magnets ARE used in guitar pickups. The Fender Samarium Cobalt Noiseless is one (if Samarium is considered rare earth).
Neodymium is a great rare earth material "when used in moderation". A very little bit goes a long way. My daughter, when about 8 years old, had her hand pinned to a file cabinet while holding a small neodymium bar magnet.
Rare earth magnets are good to use when building a flux guiding structure that is primarily based on ferrous metals, with a dollop of magnetic material.