Use of Reaction and Increased Action to change from Standard to Reaction is on spotty legal grounds
First off, one of the changes from 3E to 2E was to explicitly remove the route of just adjusting combat actions up and down. It was not a change without controversies, and you can see that they were still fine-tuning it when DC Adventures released with them still present, and they were removed by the time of the M&M Heroes Handbook, but nevertheless, there's clear signal that they were trying to get rid of people getting "extra actions" by reducing the action cost.
And yes, the setup you mention does seem to show up in the book with both Reaction as an Extra, and Increased Action as a Flaw, existing. However, Reaction can only be applied canonically to either Free or Standard action as either +1 or +3 (and yes, Power Profiles introduced cases of applying it to Move actions, but that's canonically a set of optional houserules), and my argument is that the mention of Increased Action of Reaction should have just been to convert a Reaction Power back to its original Action, something as easy as removing Reaction from the power.
That said, Rule 0 is present
If your GM is fine with this, cool. Have fun. If you are the GM, be aware that your players are going to try to pull similar shenanigans, so be ready for that.