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This sort of ranked choice voting would be a pretty good solution to the issues with the 5% barrier.
It would also empower small parties like Volt or ÖDP, especially in terms of party funding (which is tied to election results).
Although tbh, BSW (which are openly pro Russia, so their ranked choice might have been AfD) and FDP (whose understanding of their oft-touted economy is on the level of a second semester econ major with a trustfund) not making it into Parliament this time is the best thing about these otherwise pretty terrible eleven results.
Just imagine being a artist, doing furry because you love it or maybe just because it pays your bills. And then someone from HBO contacts you about commissioning a picture of John Oliver as a horny otter in skintight jorts.