Here's some things one can do with working on top of the dither as much as they do outside it.
I don't mind the invention of technique names as much as I used to and I'd like to see this sort of dithering used more so if the name helps popularize it that's great. The problem with selout was not the name, it was the concept behind it being considered prescriptive for a period: (without wanting to turn this into another selout thread) I mean 'if you want to be a pro pixel artist, put these broken outlines around your sprite!'.
The whole premise that this helps readability of a sprite against a background color of any type was a mistake in my opinion. Usually used in Capcom sprites, most of them very big sprites, nobody's eyes will stop tracking chun li if she passes in front of a blue background exactly her color even very fast, really.