It's quite strange to see many of my thoughts written out - I followed a fairly similar (very close, actually) process of thinking when designing my shadow engine. It's somewhat awesome to see that I wasn't completely fumbling in the dark with guesswork. You can see a demo of  one iteration at http://sidelinegame.blogspot.com/2009/10/behind-veil.html

It needs some updating, mostly in the form of stopping shadow overlaps, but I'm trying to work out a way that wouldn't stop the objects being able to shadow each other and still be decent looking and fast.

It's quite cool that you've tutorialized your stuff, too. I've been planning on chucking my code into open source once I've fixed it up a bit.