That's basically what this is, except you do it for the query rather than for the index, and you build the structure more intelligently than just inserting all

That's basically what this is, except you do it for the query rather than for the index, and you build the structure more intelligently than just inserting all possible insertions/deletions/substitutions. If you wanted to make an index like that you could build a Levenshtein DFA for each term in the index, and then union all those together.