That's actually quite a good summary. Maybe you would consider putting it somewhere on the wiki?
The downside of this is that this makes the characters weaker in the powerplaying sense. Powergamers may take ruthless advantage of this weakness, which is why it works the best in an environment where majority of the players are interested in playing on this level.
I don't necessarily see this as a disadvantage. I have seen my characters taken advantage of in this way in the past. Each time this has happened, I have been really happy about it, because what this means is that the "powerplayer" really took the time to study my character to figure out its weaknesses. This is what roleplaying is all about.
Conversely, I never refrained from exploiting these self-imposed flaws, in ways consistent with my own characters. It is from these interactions that surprises occur, and a surprise is always better than any pre-crafted storyline.
