I remember a discussion about something like this on the dw-discuss lists before Dreamwidth hit open beta. I'm not sure what option this would fall under, so I voted for "other" - but the version I remember liking best was a flag whereby the user could mark an entry as "read" (or "most recently read," if that makes sense) - such as including a link along the bottom of the entry as "mark read." I'm not entirely sure whether the suggestion you're making is the same, or a bit different from this.

I'm have no idea what the viability or technical coding difficulty of something like that would be, though.