Okay, let's take a fairly typical F1 laptime, of 90 seconds. Let's say that lap was completed at 150mph average speed, just for the sake of argument (giving a 3.7mi lap... I know that's over the top).
At 120% of that laptime, you get 108 seconds - 18 seconds slower than a fast lap. Now, considering the slower cars on the grid (usually only 3-4 seconds off the pace) often cause problems for faster cars, how is 120% even remotely useful? 120% brings your average speed down to ~123mph, which is a drop in average speed of 27mph.
27mph slower or 18 seconds longer on a single lap? I can see that increases safety a bit - but that's still really dangerous. How about 105%, or some altogether more intelligent figure?