I did this. I did it mostly for aesthetics, so it didn't look like I just piled a bunch of dirt in my front
yard. It is still growing pretty well, but this is its first season. We'll see how awesome it looks come late summer.
I was going to make a third level, but once I got to this point it seemed excessive for what I was doing and difficult to plant in, so I left it. I watered it a couple times after first planting in late summer, it seems like the wood has stopped wicking the moisture faster than the rain can drop it, but I live in Oregon, so that may not apply to you for a longer period of time.
I now have onions and garlic growing in the lower section as well as some
volunteer ground ivy, clover, and I think plantain that I may remove in spring. I put some strawberry and asparagus rhizomes in the bottom section, but those are either not getting
enough moisture or don't like the cold of fall or maybe there's something else they don't like. If they never sprout I can live with that, but hopefully they'll sprout when it warms up.
I haven't really seen any downside to this method thus far, but it's early.
FTR, I'm new to hugel and new to
permaculture, so I don't have years to back up this experiment, but I thought I'd share.