My wife is a teacher in the NSW education system (Australia) and I've seen her use the rectangle system. However, the rectangle system is used to also show that if you take the same rectangle with the items placed in it in a uniform distribution, the rotate the rectangle and its contents by 90 degrees the the number of items are the same, but the row and column numbers swap around.
If anything the rectangular system shows that multiplication is commutative, which I feel is its real value. Interestingly enough, that isn't ever explained to most teachers so I'm not surprised if it's being misapplied as a technique for learning!
