One issue you'll run into is that the mesh is camera-relative, so you'll get a "swimming" effect as you move and pan the camera around, as the topology of the mesh sweeps over the underlying heightfield data.  This can be a distracting visual artifact.  However if you can minimize that, it could be a good approach.  It's reminiscent of what CryEngine 2 did for water, as described in [this article](http://developer.amd.com/documentation/presentations/legacy/Chapter8-Mittring-Finding_NextGen_CryEngine2.pdf).