I agree, this is awesome. But it wouldn't have to be too limited, I mean if its like viewtiful joe and you only have a few seconds of bad-assedness, it would essentially feel like bullet-time.
A barrel might not be explosive in reality, but then in the other mode it rocks the building.
... but there can be a downside.
Maybe your enemies are hard core as well, and can use the power as well. Certain bosses can, I don't know, catch a rocket propelled grenade, light their cigarrette with it, then throw it back at you. It can be over the top silly... which makes it, again, awesome. ... Then again, maybe I'm looking at this the wrong way.
I'm going too far into the kick-ass and not looking enough at the realism aspect... you don't want it to resort to cover based whenever your out of the mode, right? ... but then again, it doesn't solely have to be a gameplay gimick, I think it in and of itself is really cool, and can make for a cool concept.
And of course a fully fleshed out version put up here may cry out for ridicule by the users of the site, so I can see how you jumped in, said the concept, and jumped out.
Maybe I'm just talking too much to put off doing an essay. That works too...
Now what if the 'real' mode made you safe from all sorts of dangers? You enter a sewer in the bad-ass mode and its filled with monsters or something that tear you and everything in there to shreds, in 'real' mode, you can see an outline of them, so that when you're down there you can temporarily turn on the power mode so it can kill your enemies, and still give yourself enough time to turn it off when they leap at you.
... I like good concepts... it means I can play with them.