Setting toe-in (tell me my theory is wrong)

It works fine for a TJ Dana 30 or front Dana 44 that is reasonably still close to the original axle design with the factory geometry for the steering.
I have no doubt it works, in fact I used that technique when I did my own alignment. My point is that 1/8" measured from right off the rotors vs. at the radius of a tire or farther, and anywhere between, will not be the same angle, so the 1/16"-1/8" becomes a catch-all for all cases. It is not really an objective measurement of toe-in (usually measured in degrees) unless the distance from which the measurement is taken is specified. Of course, this is really splitting hairs, but I thought I'd expand on it.