Nobody likes to fail their save against a fear effect and wind up missing the rest of the encounter.
This is why I suggest allowing a Will saving throw each round at the start of your turn to either negate your current fear effect condition or at least downgrade to a lower level of fear condition.
From Cowed to Panicked to Frightened to Shaken.
Fear should be something you mentally struggle with throughout its duration. At the very least it gives your character something interesting to do as he/she tries to remind herself why he/she came to the dragon's cave in the first place: To rescue his/her family from the dragon's cooking pot. The DM can describe memories from the character's past each time he/she rolls the saving throw die.
For a fear effect spell, the spell's duration is prematurely ended when the affected target makes a saving throw that downgrades from shaken. Spell descriptions would not have to be changed for this.
I think it's backwards compatible.
I'm in favor of the save/per round reduction in category. i feel bad for my players every time they fail a save and get panicked. its practically a guaranteed sit out the whoel fight, or run off and die to the next encounter room. I also feel that it would work fine as far as backwards compatibility.