There are two things I don't like about this method of window replacement, as mentioned already:
1. You end up with a smaller window. Yes, it will be only a couple of inches smaller, but window size in bedrooms has to meet certain code, and you don't want to be in violation of that code.
2. Your new window will not be 100% leak proof. Unfortunately, leaks may start happen after the warranty is up and the installer is nowhere to be found.