Is there anyone out there that would argue in favour of the traditional line-drawing method, and can give some tips for overcoming potential barriers such as the example mentioned, or should I just stick to the inverted mesh method?
Stick to the inverted mesh method with spherical mapping of a gradient texture... much faster , easy to implement etc... The method you're attempting is going to be far too slow to be practical in a game ( especially the occlusion part ) .... but I guess you're realising this now?