[georgefox]

One of the interesting insights in differential privacy is that to provide privacy protections that can't be reverse-engineered, the process has to be random rather than deterministic. The sort of algorithm that OP describes is really neat, but in addition to what dp_throw says, deterministic algorithms like this that choose how to anonymize things based on private data can reveal information about that private data in the very way that they format the final data. (This may be less relevant in the case at hand, but consider a setting where it would be sensitive to know if someone is in the database at all, e.g., a medical study.)