To be a little technical, this is not actually prisoners dilemma, because they are allowed to communicate. The whole point of prisoners dilemma is that they cannot communicate, and thus, must choose to cooperate or defect based upon their knowledge of nash's equilibrium alone.
Although this is honestly quite an interesting solution to this kind of problem. I'll be using it the next time I'm offered a situation similar to this.
To be even more technical, "Prisoner's Dilemma" is actually used as a generic term in game theory. It refers to the set of two-player games with this kind of payoff matrix (see here). The classic prisoners dilemma also adds in the inability to communicate (as well as a bunch of backstory which isn't relevant to the math), but not all prisoners dilemmas need to follow that pattern.
I found this to be a very interesting method of dealing with a modified Prisoner's Dilemma. In this situation, if both players cooperate they split a cash prize, but if one defects he gets the entire prize. The difference from the normal prisoner's dilemma is that if both defect, neither gets anything, so a player gains nothing by defecting if he knows his opponent will defect; he merely has the option to hurt him out of spite. Watch and see how one player deals with this.
http://www.youtube.com/watch?v=S0qjK3TWZE8