I can see this working as a special training to gain a specific ability, say you're training with a master to gain a specific feat. This could work out as a DM reward, maybe an useless feat for prereqs (say, Endurance or Diehard), but I wouldn't attach XP to it simply by the fact that the game is built around adventuring. I'd agree that this could also be used as backstory for a higher level character to justify his level and mentality.

As for mental trauma, D&D doesn't handle that, but I can see this "training" producing all kinds of mental issues, from chronic fear of pain to apathy, delusions of immortality and everything in between. Even if it has no mechanical effect, anyone that trained like that regularly would not have a healthy mind.