This sounds promising to me!
After playing WoW, a second-generation MMOG, for a couple of years I can honestly say the lack of public dungeons bored me in the end; Most, if not all caves were frustratingly small and did not offer much space for nothing else but do what you were sent to do in a quest. Guess I'm a caveman or some such.
And as mentioned before me, it sure reminds me as well of Runescape. Not in a negative way, though.
Personally, I can see a lot of potential with a public dungeon system like this in a modern MMOG. Something to do when bored, and a possible chance to meet someone -while dungeoneering-!
Edit:
Me too

I wonder how many people can be in a public dungeon at once in TESO?
It all depends on the way it has been programmed, I'd say. If it's the same as that of outdoor areas, I would guess a maximum of a city's worth players.