The flaw in this strategy is that it requires that shuffle is turned off. Shuffle modes will also randomize within each sub-playlist, which is not the desired effect.

True, though shuffle could be easily turned off when in a "Weird Al" mood. For my part I almost never turn on shuffle (though I've been toying with some of the custom shuffle modes lately), instead using this method of sub-playlists to build up my random lists weighted the way I like, binding songs together, and spacing out songs by the same artist.