I choose not to vote, because either of the two options are at opposite extremes.
However, I will voice my opinion.
I think the general idea is great, but the thought is poorly executed. I find it rather common to misclick and have my mouse shift upon this sheet of paper its gliding on, in which I may execute such an action and cause an app to be removed from the dock accidently. Considering I have avg. accuracy with my mouse anyways, and speaking from someone with poor kinetic skills, this idea may not suit everyone. I feel this particular operation works best for those with appropriate accuracy and precision with their mouse.
You can't have that kind of behavior because dragging an icon off the Dock already has an effect: Removing that app from the Dock. Very intuitive and straightforward the way it is, IMO. If you were to drag an open app that has a shortcut in your Dock off the Dock to close it, what would happen? It would disappear in a puff of smoke and then just reappear in the Dock like magic? That's too weird, and could be confusing to some people. Drag-off-the-Dock-to-close would also barely save any time over simply holding the mouse button down and going to Quit, and it would mean just as much if not more mouse effort. So, it's a nice thought, but... no.
I right-click to quit applications frequently when I have related applications open and want to close them all quickly. This is also something I found useful when using Windows and wanted to close something other than the frontmost application without the carousel through most or all of them.
Dragging them out of the dock to quit them might be okay if there was another way to keep them in the dock but inactive.