The issue that springs to my mind is that of damage. Dummy Damage.
Everything thing in this game can be destroyed. Now we have a magic cloth dummy that cant be?
I don’t think it is unrealistic that an item made for pummeling would be more resistant to damage than other items in the environment.
I'm not sure why such a dummy would take damage the same way a monster would.
At best it'd be wildly inaccurate, at worst it would sometimes take more or less damage from certain weapons than monsters would for no discernable reason.
There could be a few different versions of it, like “straw dummy”, “armored dummy”, etc, that have different levels of resistance to different types of damage. And even if it wouldn’t accurately reflect the amount of damage that real enemies take, it could still be used to compare damage of weapons to each other.
Also, something I forgot to mention in the OP, and something I’m not sure would be easy to code. The training dummy might be a way to test armor as well. If you could dress the dummy with torso armor it might help to get an idea of how much armor you need to take on a new challenge.