Toffee's Mom
I totally agree with your technique.
I taught my boys "leave it" early on. They know that regardless of whether it's tasty garbage or another dog or another human being, they are to stop and drop.
It does't always work when they are off leash, but is totally reliable on leash!
To train "leave it" for an outside distraction, it helps to have a helper.
Put your dog on leash. Have your helper with some really enticing goody to entice your pet. Your helper should be waving and doing whatever he can to distract your pup. When pup is distracted, tell him to Leave It, keep on walking, even if it means dragging pup a little. Keep your eye on his eyes. As soon as he looks back at you and he will eventually, praise (or click) and treat
Repeat, repeat, repeat. Eventually he'll get it
Leave it works in concert with the Look command. Look at me and you'll get praise.