Isn't Bitcoin Core and some wallets already have a coin selection strategy?
Yes, plenty of wallets will automatically select inputs, and plenty of wallets do so in a way which compromises the user's privacy. All I'm saying is that I wouldn't want to use such a wallet or feature.this algorithm will favor larger UTXOS that do not generate dust change & try to use ur old dust at the same time.
Yes, this is exactly what I'm saying. It would automatically include any dust inputs in to a transaction you are making so they are consolidated in to useful change at the same time. This is bad for privacy unless you are very carefully selecting which inputs to use.As I said u add the extra fee for only 1 more UTXO input not a complete TX, and the algorithm will not do it if it costs the user.
A P2PKH input is still ~148 vbytes. Given that a dust input could be as low as 546 sats, then even a fee as low as 4 sats/vbyte might cost you more than the value of your input. The whole idea is to accumulate the old dust to ur new change with minimal cost
If you don't care about privacy, then the best solution is simply to consolidate all the dust in your wallet at once whenever you make a 1 sat/vbyte transaction. If you do care about privacy, then you should try to avoid creating dust in the first place, and if you do, then be very selective about which other inputs you consolidate it with. 
