The philosophy of vim, is that it's extremely customizable, and whatever workflow is most efficient for you is completely up to you. So, no I don't think this goes against the philosophy of vim. I have
<C-H> <C-J> <C-K> <C-L> remapped to cursor keys in my
.vimrc. If it makes you more productive, who cares if it goes against the norm of vim?
Isn't the idea of "normal mode" just switching Read Only Mode on and off, with the clever allocation of hotkeys that could be achieved instead by prefixing all of them?
Not really. I'm not sure what you mean "switching read only mode on and off". Vim does have a read-only mode, but this has nothing to do with normal vs insert mode. The way I think of normal mode means "each key is a composable function".
As for philosophical thoughts on this, the workflow you're proposing sounds very emacs-ey. Emacs heavily relies on modifiers (such as ctrl-alt-super, etc.) for the equivalent of normal mode commands in vim. It might be worth a shot to try out emacs if that sounds appealing. Disclaimer: I have never used emacs before.
However, if you want to use vim with your own fusion of normal and insert mode, I see no problem with that. You'll find the
gi commands both very useful while you're creating your mappings.
Also are there some examples of useful Insert Mode hotkeys I'm not aware of that I should want to preserve?
This is very subjective. What I find useful, another might find annoying, and vice-versa. For example, I find
<C-V> <C-N> and
<C-O> extremely useful. In the end, only you can decide which
i_CTRL-* keystrokes are useful to you or not. I would recommend just checking
:help i-CTRL-<some key> whenever you want to map something new in insert mode.