I think the funnel looks like fun. Once. I wouldn't try to force it on a group more than once, and really, it shouldn't come up too much anyway. Characters replacing slain characters later in the campaign certainly won't go through it. It does look like it could make for a comedic/stressful first session.
Still, there is a nagging part of me that says it has "Screw Job" writ all over it. On the surface it's pretty cool. Make up 2-4 0-level characters, by rolling 3d6 in order, roll 1d4 HP, roll an occupation (which grants some rudimentary, crappy equipment), and seek glory. It is expected that only 1 or 2 will survive. From the survivor(s) one is chosen to be your player character. At this point you select a class, and complete all the other details.
The Screw Job whispers start when I realized there is nothing mechanically to guide this process. Say one of your characters has kick-ass stats, and they're arranged how you want. So you can just use your other three 0-levels as meat shields. You come out the other side with the character you want. Done. Why not just roll up four characters and keep the one you like best? Isn't that what it comes down to anyway?
The other thing that sort of obviates this process is that nothing in the 0-level adventure actually steers the characters toward a class. When it is over, the player still selects whatever class he wants, with nothing in the adventure informing the decision. It is largely based, as this decision has been from the beginning, on stats. Of course, role play can enter into it, but when you're rolling straight 3d6 do you really want to call your guy with a 16 STR and 11 INT a magic-user? Probably not.
None of this is meant to imply that the choice of 0-level character to "elevate" to PC is as cut-and-dried as my examples. However, any nail-biting is largely not due to the funnel. Unless your early favorite becomes goblin food. The point is, whether it is an easy decision or not, the decision will be based on stats and the class you want to be playing anyway. The funnel will have very little influence on your decisions, and any influence it does have will be of the restricting-your-choices-through-attrition variety.
Something else about the whole process that seems disingenuous: The rules are very explicit (bordering on demanding) that character be made with the funnel at least once. We are told in a very stern voice that we must roll 3d6 in order, must randomly determine starting occupation, etc. There is an air of superiority in the tone, a hint of "This is how REAL role players roll up characters". Yet, if you strip away all the superfluous baggage of the funnel, you're rolling up four characters and keeping the one you want. Not as strict or random as the Dire Rules Voice leads you to believe.
I'm not bashing it, much as it may sound so. Like I said, it sounds like fun. Let's just keep it in perspective. It should not be viewed as an integral part of character generation. A fun pre-game when the group desires it, sure. Some great and lasting stories can arise from such misadventures. That alone can be worth the time, especially on the eve of a campaign that is intended to be long-term. Those "Remember when we first went into that burned out chapel and I saved your ass?" stories make a fine foundation for a life-long adventuring relationship.