I went to primary school in Germany from 1996 on and I was in one of those classes that learned "Reading by Writing" (I explained above that the referenced article gets the German original article the wrong way around).
The way it basically works is, that you get a phonetics-alphabet and learn just the sounds and then you write them down in the way you think is right. My class was, in direct comparison to the class that learned traditionally, on average half a grade better in writing and reading by year 4. But my class had only eleven pupils and our teacher had the chance to explain errors and nuances. Usually, classes nowadays are more than double the size.
I am sure that, without proper guidance, many mistakes can be made. The primary thing my parents loved was, that I was able to read stuff the first day I came home from school with my phonetics-alphabet. I could read my children-books from day one. We didn't start with the letter "e" or "o" and only short words. This gave me a real thirst for books and I read "Robinson Crusoe" in second grade.