It yields regularity and helps him win league titles, but doesn't always give his side credibility when things come down to results in 1 or 2 games. He's never been too great at managing cup ties. That's why I don't stupendously rate this sort of dominance, but I understand why people buy into it. Who wouldn't when you can take this approach almost anywhere and when drilled in properly players can have the title wrapped up by April. It's still the most successful way to play modern football so yeah, I don't blame him. Still it's not faultless.
i agree that its not faultless. it has certainly failed him before (ie real's thrashing of Bayern in 2014 and barca's embarrassing semi-final exit to Chelsea in 2012) and will again, but at the same time so will any strategy since there is no magical 'winning formula'. i also don't think its as universal (that is, widely applicable) as you write. it cannot be instituted just 'anywhere'. it requires highly technically proficient players who are also willing to adapt, and a club with the money to sign such players. he could never, say, manage west-ham and succeed with it there. on balance there are fewer better alternatives to it; what limits it, as i said, is that it can't work just anywhere. it is precisely that style that allowed spain to dominate international football 2008-2014, barca spain and to a lesser and less consistent extent europe (since you are right to say it is less successful in limited-game club cup competitions), bayern germany (i.e. wrapped up the league in record time but i will concede this isnt a particularly significant example since bayern are virtually guaranteed the league anyway) and now city the PL this year (record point differential etc).
contrast it to mourinho's pragmatism, for example. mourinho is not about the 'way' (of playing) but about the 'result'--ie a functionally pragmatic approach to football. but he has been less successful with it than pep has with his both in terms of quantity and quality (ie mourinho's pragmatism has yielded way more fuck ups like the 5-0 vs barca and season-long collapses like his last year at real and his last season with chelsea).
finally, as an added bonus, pep's style is also WAY more enjoyable to watch and more entertaining, which definitely counts for something-especially since it has roughly corresponded with titles as well.