I'm all for simplicity, but this solution has issues.

In your first example with the two buttons, for some reason, you use a label element for a button. In assistive technology (AT), that causes the button text to be ignored. In other words, when the button receives focus, AT will read "button 1 button" instead of reading "I am not inert button".

Additionally, in your two scenarios for using inert, I would remove scenario 2. No interactive element that is visible should have an inert attribute, for the same reason the disabled attribute shouldn't be used. I go into great detail in this article: https://medium.com/p/73d16a0fb32b

Specifically, disabling a control (as inert does) does not communicate that it's disabled to all users. It's far better to hide the control altogether.