With the assumption that all players agree upon this strategy and that no players enter/leave the table, it is safe to say that making an agreement like this would be considered soft play and could be seen as cheating by the organization that runs the tournament.
The assumption that the players playing softly in this situation will not be losing chips and players at other tables will is incorrect. As players get knocked out, the average stack size increases putting players at the soft table at a disadvantage.
In the real world, this full table soft play is not a concern for the following reasons:
blind levels are constantly increasing in tournaments, so if one table decided to participate in soft play across the entire table their stacks would have a lower number of BBs over time. This makes it likely that they will be knocking themselves out of the tournament even with soft play
tournaments regularly switch players around through table breaks as people get knocked out so the strategy would quickly fall apart and not benefit any of the players. I could maybe see it work in a tournament with a really deep pay structure up to the point of min cashing if they all stayed at the same table, but as soon as the table breaks or a new player enters the table all of the players will be at a big disadvantage (due to their small stacks). This is essentially guaranteed to happen before players reach the money
Players do not like to play poker this way. They are diminishing their chances of a deep run by not accumulating chips from other players. They would also probably take advantage of the agreement at some point or another. If someone has a huge hand and they can win a lot of chips from other players, they will have a hard time betting small and not re-raising in good spots.
This is not to say that soft play never occurs, but when it does an entire table usually does not participate. Situations where soft play could occur are maybe the final stages of a tournament with 5 players left. 4 of the 5 players are friends so they all agree to play soft towards each other and get aggressive against the odd man out.