Great idea!
Although, be prepared for the 12 month old to get upset about being discluded.
I have a 13 month old "dumper" in my care who is also like a bull in a china shop sometimes when the older older ones are playing nicely with the blocks or puzzles. I give him warning then he is confined in the playpen with toys and he gets really upset.
Oh absolutely ... They totally lose their noodle .... That's why sometimes its easier and more peaceful to put the older kid in it and they actually really like it.