It works great. The systems already starts in a usable format, and when they need intervention, they are in a very standard format that is easy to start working with. Besides, today we also send applications back to shadow-development, and they are able to maintain them until something big changes.
Shadow-development isn't very shady around here anymore.
The platform itself is quite good. But it only runs on Oracle, so I'm not sure I recommend it.
The reason they don't do this is because of politics. People want power, and they do that by gathering larger numbers of reports. The method you're proposing means distributing power among small groups and teams, which can only work when it's done from the very beginning of the company's lifecycle (i.e. people will not have to give up reports/power to make it happen).