That's an interesting idea. While not impossible, it would probably be too slow or choppy to be good for an NES game. Plus the attribute tables would be pretty much unusable, so this mode on NES would be 4-colors, while SNES's mode 7 has 256 colors (one byte per pixel!)

I believe isometric games are tile-based by their nature, so that's suitable for the NES (look at Solstice, for example).