This sounds less safe because you'd need to wake him up to torture him into insanity. If you wanted the multiple layers you could torture the obliviated version into insanity, but I think I prefer the transfiguration. I'd even consider making it permanent with the Stone of Transfiguration, but this would result in a lot of lost knowledge and it's also possible that the horcrux network would consider it a death.

ETA: I rather liked the wand-in-a-dementor-pit idea.