IMO, your edit is best way to see the movie, for the first time. It's a lot more intense and disorienting, to see her story, straight through, without explanatory interruptions from the real world.
Nitpick: there were a couple of jumps in the music. I think the music was similar enough that it might've blended successfully, with several seconds of audio crossfade. I don't recall if the footage could've been trimmed enough to to allow long crossfades, though.
I posted this to the newsgroups - a.b.dvd, a.b.dvd5, and the nzb is crossposted to a.b.nzb.