Isn't this also Miyamoto's/Nintendo's approach? Get the basic gameplay mechanics right by and play around tirelessly with basically nothing as far as 'production' work goes, and move on only when that's been achieved.
I only did some level design back in the day, so I don't have much experience with games, but I find this 'prototyping' thing to be hugely valuable in web development and design work I've done. I often just try all sorts of shit (whether front-end or back-end or design), focusing on quick feedback and iteration, and once things coalesce/work/'click', I might just scrap the whole thing and start with a more 'formal' version.
Especially with design stuff I've found that just getting something and then playing around with it works so much better than trying to go for a more formal approach from the start. And making a clear distinction between the 'playground' and 'formal' phase has also helped a bunch.
Finally, I've all but stopped doing the 'Lorem Ipsum' and image placeholder work. If I'm going to 'prototype' a design, it can be a bit messy, but it has to be as real as possible.