I'm shocked at what teachers today do to give the kids the best possible grades on tests anyways. Opportunities for retakes, which isn't so bad I suppose. Another thing is, the kids get to take the graded test home, look up the correct answers, and mark the tests with the corrections, they can get partial credit added to their grade. While I don't have a problem with giving kids credit for work done, this artifically inflates grades and makes the school and teacher look better than they really are. I think the test grades should stand as they are and if the kid does bad, so be it.
Most kids, after taking a test, get the grade back and pay no attention at all to their mistakes. This teacher is trying to get the kids to pay attention to mistakes they have made and to focus, once more, on what the correct answer is. Yes, it does inflate the grade. I think I would confine this activity to worksheets (weighted less than exams) and let the exam show what they really know.