That appears to be the Pickens plan, pretty much.  I'm not sure what's left of it, after the maker of the Phill went bankrupt.

I still think it is a huge mistake to subsidize vehicles with lousy fuel economy, whether they're topers or huffers.  Natural gas is only cheap at the moment, due in part to the collapse in US industrial demand and the sunk costs of a large amount of LNG infrastructure in places like Qatar.  Producing new shale gas in the USA needs prices around $8 per million BTU.  This is cheap compared to gasoline, but expensive compared to the historical prices of home-heating and industrial fuel.  Shifting enough demand to NG will push prices up to that level and keep them there.  Instead of trading food for road miles, it's the economy being traded for road miles.  Then there's the question of what happens when there are NG shortages and vehicle usage is cut off to keep houses warm and the lights on.  All the dual-fuel vehicles switch back to petroleum, running up prices there and perhaps creating secondary shortages (though less severe than without fuel-switching).

If we were talking about vehicles like the Honda Civic GX, this wouldn't be such a big issue.  However, the incentives to replace these "clunkers" go to monsters only a bit less thirsty than my neighbor's 14-MPG Durango.  More flexibility may help, but failing to promote economy is just piling new problems upon the old ones.