It would have a purpose if all the players on the losing team were released as free agents too, but that wouldn't be an improvement.
I lol at that. In my head I pictured a gladiatorial arena where all the losers got beheaded. Every team would bench their stars until after the ASG praying they didn't get anyone selected to it.
But seriously, I think there should be some minor award for an All Star appearance. Maybe a temporary merch boost, small one time monetary award (not as much as what the OP said but something), or at the very least, a mention on the player's page that he got selected that year.