Sure. I'd use that mod myself if I ever actually looked at the compass. I just thought it was silly to say that the compass "defeats exploration."
And as TheRevanchist points out below, you can remove the compass but not the map, since the radiant system would break without it. Well, I guess you can remove the map and then have no clue where someone just asked you to go, but....
On a similar/related point, I've often wondered why everyone seems to give the player a full map/compass/fast travel/'go here' compass right off the bat. Such things are major convenience factors, to be sure... but they're conveniance factors. Why not make players earn them?
You could do it as an extension of the level up system, or a quest/investment system in its own right.
If you tied it to level ups, imagine if there was a skill tree for 'Cartography.' Similar in shape to the DA2 skill trees, with different travel-related convenience factors stacked behind it. Tier 1 gets you a world map HUD- but no tracker for player, no markers, no caves, and not even a guarantee that the map is oriented consistently with North being up. Tier 2 is using a compass- now the map will always be oriented north-up, the player's direction of travel is shown. Tier 3 is plotting- if you find information where something is supposed to be, it will be marked on the map. And so on. These progression points can have their own upgrade pieces. Upgrade 1A could be Charting- whereas before the player only had a HUD for the world map, with caves being unmapped, now caves will be drawn as they are explored. Upgrade 2A could be Terrain Association- now the map will show major topographic features (hills, valleys, rivers, forests, etc.) rather than being a blank-faced map. Upgrade 3A could be self-placement- now you can track yourself on the map HUD, as opposed to having to infer where you are by terrain association. Etc. etc. etc.
This would work best in a system in which multiple skill investment points are given at once. It would be a RPG trade off between useful convenience factors (which, at the end of the day, aren't necessary) and pure combat ability investment. Think how the Fallout perk system has very useful, but utterly unnecessary, perks for non-combat playstyles. Throw in additional viability for map-related skills (upto and including being able to sell your created maps of caves and dungeons for rewards) and you could make a Map skill tree a desirable investment.
Alternatively, you could make a map HUD and travel a convenience system developed by quest rewards and deliberate action. Maps are now items of varying quality- they cover various regions, with varying degrees of detail, depending on how you get them. You can buy them, you can find them, or you can make them if you have the resources to do so. You might even be able to sell them, especially maps you yourself create of long unmapped dungeons and forgotten places, with additional value the more detail the maps hold. A compass is a rare and expensive item (with limitations in high-magnetic/magical areas). To place an destination on a map, you must have a map and receive the information telling you where to go. No omniscient map-tool that knows where every long-lost artifact is.
You could gain functionality for various map skills by visiting scholar-trainers, or get unique abilities as rewards from quests. You might not have an omniscient map, but perhaps you could pay an Oracle who could mark your quest objective on an appropriate map for a fee. A regular compass may be rendered null and void in certain areas (including metalic dungeons), but a magical compass might have no such limitations. A Potion of Guidance, a Blessing from a God of Seekers, these might give temporary 'go in this direction' or 'arrow above the objective' perks... or you could go on an epic quest of enlightenment to gain the skill permanently.
Map functions are convenient, no doubt, but much of the time they are superfluous. Why not make them part of the game, rather than take them for granted?