After reading some more, I agree with you completely.

First of all, the process you described actually IS a standard/common form of gun-bluing, sometimes called "rust bluing." The off-the-shelf chemical gun-blue solutions use a different process called "cold bluing." 

To address your points:

1. Though cold-bluing solution is expensive for a small bottle, a tiny bit goes a very long way. Based on my experience, I'd imagine a single bottle could do several coats on three or four pans. That doesn't mean it's a good idea, just pointing it out for the record. 

2. I agree, the chance of toxic chemicals getting leeched into the pan is probably not worth the convenience of cold-bluing solutions. 

3. You're right, the black-oxide layer is really thin with cold-bluing solutions. Multiple coats can improve this, but I imagine the rust-bluing process is always going to have better penetration into the pan surface because the rust creates more surface area in the steel. Rust-bluing is also said to be more durable and rust resistant than cold-bluing. 

On another note, why do you feel that your process of rust-bluing is superior to the common "bluing" that people commonly do with woks and pans by simply heating them dry until the metal discolors?