Assuming the preference defaults to off, the user should be consciously aware of that when turning this on. From the description, it is clear that other users trigger the bump in notification level.
I can see where this is useful, particularly in mailing-list mode. Say I watch the cat category. I get emails for all posts there. A user mentions me in the jaguar category, which I don’t watch. I’ll get the email about that post, but nothing afterwards. This would fix that.