Yes, but I'm not talking about pay and go for NR» am I?
If I've understood you correctly then you are, aren't you? I'd have said that touching in/out for whatever journey you wish to make on the rail system counts as 'pay as you go' (which is a term used to distinguish paying for journeys as you take them, as opposed to having a period pass allowing unlimited travel).
Someone else has no doubt already pointed this out, but for a start there's an issue with first class - do you have separate 'pads' for first and standard at every station?!
What strikes me as a bigger problem is this - on
Oyster▸ PAYG▸ , as has been pointed out, the maximum fare for the journey is deducted initially, then you're refunded as you touch out. Not enough credit, you'll be told to add more value to the card before you can make the journey. Deducting the maximum fare for a journey on NR is clearly not viable, so effectively the passenger would end up paying in arrears for their travel (rather than in advance for a paper ticket).
I'm struggling to comprehend what the advantage of your proposed system (smartcards, touching in and out but with guards still checking tickets) has over paper tickets, frankly, with the possible exception of enabling last minute advance purchases if you're travelling from a station where you can't collect tickets. That issue could be solved in a much more straightforward manner with some form of 'print at home' or eticketing as is already available with some
TOCs▸ , it doesn't require blanket smart cards!