This is a fantastic idea; doing it letter by letter will help so much to help people learn to actually spell it. I think it could use a tad more time, like 30 seconds. I suppose I could just take it untimed, though. You could do a series on all the hardest spelled cities and whatnot.
There are people who have done similar thing but they either:
1. Don't do letter by letter
2. Don't use yellow box