I don't see why limp-reraising with a short stack in NLHE couldn't be effective too, although as with PLO I almost have to puke in my mouth a bit to limp into any pot as it's been drilled into me so many times from so many different sources that it's the ultimate noob move (and obviously I certainly agree with that when deepstacked).
In PLO it does indeed seem to be both a very profitable strategy and one that is very straightforward to execute in comparison to the minefield of complexities of deepstacked PLO play (which for the record I actually really enjoy, but it's certainly not simple).
The players in the game I'm talking about are evidently loaded and lacking in any kind of nuanced PLO theory. Of course they know the basics, but I saw some unbelievable mistakes being made (for example one lady calling a potsize $2000 bet on the river and expecting to be good with an AA overpair on a super wet board, and two players playing for stacks with straight vs straight on a board with three spades). They also play pretty deep; there was over $30k on the table and several $5k+ stacks - and of course the amount of money on the table and the stack sizes usually get deeper as the session goes on. I'm 100% confident that the vast majority of these players would not be adjusting at all to having a short-stacker in the game - most of them would probably just dismiss it as a "broke min-buyer" that they can largely ignore and focus on the other big stacks instead.
For sure it would minimize any skill advantage I'd have against these players when playing deep-stacked instead, that's true. But as indicated buying in for multiple $2500 bullets and getting into regular 60/40 confrontations (though clearly very profitable on paper) is probably more than my bankroll can tolerate at the moment. But that said my first impulse, before considering short-stacking, was to return to this game with $5k (two 100bb bullets) - I've subsequently realized that short-stacking is a better option, all things considered; less variance, simpler game, less money invested, etc. It also gives the impression of being a weak player who has no clue what they're doing (with all the limping etc) and is playing with scared money (min-buying) - which again are factors that definitely work in your favor.
It definitely sounds like a super-fun experiment, if nothing more. And as you say it means the other players can get involved in 40bb flips, which they should enjoy too - and the short-stacker is ostensibly "giving them action" and creating deeper action in the game, which I'm sure they will appreciate. Definitely it's possible to spin 20bb up, but I would probably set a limit - for example getting the $500 up to $2000 - at which I'd fold for a half hour and then leave the game. This is something I'd never do in NLHE - I love playing deepstacked in that game, and when the game is good it's obviously massively plus EV - but in PLO with a short-stacker strategy it is of course the right move.
It's a casino game, so I wouldn't be worried about not getting invited back. I wouldn't even be that worried about getting labelled as a hit 'n' runner. I'd have no qualms folding some profitable but high-variance spots in situations where I've built a big stack from 20bbs. Of course it's necessary to keep the short-stack mentality/approach in mind at all time.
My next chance to test all this out at the casino will be the weekend of 16th-17 November. So I'm going to train with 20bb stacks on the $100 buy-in tables on GG Poker between now and then and get a better feel for everything. Will post updates along the way