I like the idea of added compensation based on hours covered as it incentivizes the business to avoid very small rotation sizes, but paying extra per page seems like a perverse incentive favoring instability.

It depends on who has the largest amount of influence on how noisy the on call is.

If engineers have blanket control to define what is important enough to get interrupted and to prioritize fixing frequent offenders, then sure, it's a perverse incentive.

If, on the other hand, engineering doesn't have very much control over the roadmap and/or isn't allowed to make their own judgment calls about what really matters for pages, then the arrangement that OP describes makes a ton of sense—it gets gets pages onto the budget as a separate line item, which is a good way to get the people who are really in charge on board with investing in permanent fixes.

Ehh.. Only pages between 18:00 and 09:00 count for extra pay. Which means it affects your free / personal time. Where I am, the people care a lot about work not intruding on their personal time, so the perverse incentives are reduced.