Wow, that does sound like a Web of passwords. I can see your intention but that seems a little excessive withe encrypted RAR files.

I was using the Truecrypt example as it's a reasonably user friendly method that is free and works for all coins/wallets.

Hardware wallets are deffinatly the best for usability however not every coin is supported yet. I'm looking out for when someone makes one that supports Monero (I don't think they're far off ). It's deffinatly easier to spend coins using a ledger or treezor, but if you just hodl then Truecrypt will do.