Uhh…then release PvP first. The winner of an 1 vs 1 battle can earn additional stardust, rare candies, TMs, berries, potions, revives and exp. Then the encounter Pokemon system release after PvP and at that time people trainers may have already gained enough amount of potions and revives.
Maybe they could also introduced a Pokemon Center-liked feature.
I don't think encountering Pokemon violates Niantic's law. We can still explore the world with this system. Do you remember the ones who called for breeding? This is a great opportunity for them too.
Last but not least, for people who think of adding all the features, limitations and systems from the main series of Pokemon game into Pokemon GO , it will be a 'must add' to them.