Color modulation, to me, encompasses pre-shading with a very dark color, the base color and subsequent uses of lightened base color added in a random fashion. I've even added similar tones to thinly overspray the base color to simulate weathering. I think that this is the best platform from which to do additional weathering but takes a bit longer to get all that paint put down.
What you described is the oil dot filter method, which I find to be more applicable to armor than aircraft as it can get very grimy, very quickly. Given the surface area of aircraft models, especially our beloved 1/32, I would be hesitant to use oil dots for weathering because as the oils start to dry they can leave little ring-like residues that may or may not get wiped clean by the mineral spirits.
I can post more on this later, but I'm on a work deadline right now so I must bow out for now....