It seems to me that there's a latent virtual machine in this design. You are breaking code into basic blocks and handling control state in a first class way, so

It seems to me that there's a latent virtual machine in this design. You are breaking code into basic blocks and handling control state in a first class way, so there need to be abstractions for all that, and those abstractions define a virtual machine. I think that what you describe can work. However, it's not something I can see myself using because I find source-to-source compilation too inflexible and simply don't use it. Such a technique remains as an optimization that I will probably never get to.