Its a good concept.
I did kind of the same thing....but i bought an xpen from Petedge.
I put his bed/play area at one side and a pad on the other side.
ProSelect Suite Retreat Pet Pens | PetEdge.com
Riley has full run of the bedroom now so now instead of the xpen, I have a Purina second nature doggie litter box with a pad inside it, in the corner of the room. I also have a diaper genie for the used pads so there is no smell in my place.
Riley is trained to go outside, or inside.
Good Luck!!