I don't think this will give more challenges to guys like Alvarez and Melendez. It might strengthen the Bellator tourney talent pool once the UFC castoffs are looking for work, but top 5 guys like Alvarez and Melendez shouldn't be fighting UFC castoffs.
The thing I really like is that we can probably see guys like Frankie Edgar fight at his natural weight. I know there are guys in the LW division who are fighting there just because the financial opportunities are much greater in the UFC. Now the FW will be on the same level as LW, Edgar can feel free to drop down if he falls on hard times. I'm not saying he needs to, but alot of smaller fighters in other division have the luxury of moving down when things aren't going well (Wandy, Bisping, Vera, Kampmann, etc).
Also, it's gotta be nice for the WEC guys knowing that if they put on a show, they will make UFC level win bonuses. George Roop would have definetly made 70 large for the head kick if that fight was in the UFC, as opposed to the 10 he made for.