I don't get it, this doesn't seem "simplified" at all...quite the opposite.
It seems much more complicated than just "Roll initiative and add your initiative bonus". Instead of just rolling and adding, you have to look up a table, divide your initiative bonus by 5 before adding it and limiting it to a max of 10. The fact that it's weighted towards usually giving an Init bonus of 0 also makes it seem like it's a complicated way of just removing initiative differences entirely.
The max 10 limit also breaks spells like Boost Quickness and items/potions/etc that increase the Qu bonus. Dunno how it would interact with the Haste spell (which is kind of broken/pointless anyway - use one round to cast a spell that gives you, or someone you can touch, two actions in the next round...and scaling it up for more actions or duration just increases the casting time)
And, yes, monster initiatives in original and 2004 HARP and M:AFG are way too high because monsters are all built as Fighters with Lightning Reflexes, and all have at least Qu 75 (even Zombies have an init bonus of +17 in M:AFG, or +15 as a basic "Class I Undead" in HARP 2004), but that's easy enough to fix - start by not giving them Lightning Reflexes unless they're sapient creatures who actually are Fighters or have some other reason to have that talent. And don't build all monsters/animals as Fighters. Make profession-like templates for them such as Herbivore, Hunter, Pack Hunter, Ambush Predator, etc which outline stats, talents, skill ranks/level, etc for particular types of creatures.
From what I've read, the monster initiative problem is at least partially fixed in the 2013 edition of HARP and in the Bestiary (but still tends to give excessive Init bonuses to creatures)