I love the approach -- it kind of sounds similar to my approach, just coming from a different angle.
In terms of recruiting new students, I find it helps to be out there doing a bunch of things. I get students from the choir I used to be involved in, from the Toronto song circle, from the workshops and classes that I teach, and from performing. It used to be that I had personal connections with all my students. And now I'm finding that people are hearing about me second and third hand, or even finding me on the internet. Sort of like I've reached a critical mass where my name is getting around. I do absolutely no advertising -- I keep thinking I should, but at the moment it doesn't seem I need to.
Whenever I send out newsletters to my mailing list about performing, I always include a short item saying that I have some slots open. Whether or not I think I could fit people in -- it just keeps the idea floating in their mind that I teach.
And I agree, teaching is VERY satisfying!