I've seen some issue with this approach is that management will want to sell the prototype, bypassing the "rewrite from the lesson learned" step, and then every shortcut took into the prototype will bite you, a lot..

And things like "race conditions"/lack of scalability due to improper threading architecture aren't especially easy to fix(!)..

The Anna Karenina principle looms large in software engineer projects. Basically there are an infinite failure modes that can occur due to small actions or wrong thinking by one or more influential people, but there is only one way to make large projects successful. Basically the team has to have sufficient expertise to cover the surface area, and those individuals need enough trust from leadership to navigate the million known and unknown pitfalls that await.

You don't ever make the prototype public.

Also, there's a certain point where you can't avoid management sabotaging things.