Sam, your idea will work.
As for the technical bits there are good publications which will give you details too hard to explain here.
The part I'm most unsure about is bracing and getting the bales compressed.
Has anyone got experience/pictures using this method or is there a reason I can't find any examples haha..?
In some cases compression is not even done, but it does cause issues with the wall plastering.
If you have trouble finding the books, get back and I will list some.