The attacker spends a bunch of fate points. The defender gets to see the result and decides not to spend any, because he knows that he's going to have to take a Severe Consequence anyhow, because that's the lowest one he's got left. Because of this, the attacker spent 2 more fate points than were necessary to accomplish that. This is sort of crap, because the tactical decision he made was an uninformed one.

Sure I suppose that if you simply changed a 1 stress hit into a 5 stress hit and the only thing your opponent has left is a severe consequences then spending that many fate points was a mistake. Of course the way I play it is that both players continue to spend fate points until they are both satisfied with the result (or are out of fate points). It works like your method without the unnecessary procedure.