I've never seen or heard of this before, so I might be way off here. Are you filling the entire area inside the block walls with rock? If so, what are you going to do for a floor for the house? What is the advantage to the rock over building up a compacted dirt pad?
Having done this a few times here, I'd say the advantage of rock, when you use the proper size (generally #5 or smaller), is that it's self compacting and you can quickly build up a level base for the floor.
At least in my part of VA, it's important to get the foundation walls dug down to sit on footers below the frost line and below the various types of soil and clay here. On a sloped lot, you'd need to dig down to a certain level/layer regardless of whether you left the grade alone or you took the trouble to level the site ahead of time. So you'll still require taller walls on the downhill side, etc, etc. Therefore, why bother leveling the site when it doesn't really change much? Just put in the walls and then backfill the inside with gravel and go.
Now, if a pure slab foundation was appropriate with no block walls, then it would be a completely different story. Be curious to hear why Woodchuck took this approach with block walls and interior backfill. In fact, if the walls are on footers and capable of supporting the framing above, why didn't you go with a crawl-space instead?
Our home has both elements -- main house is crawl with block walls on footers. Garage and workshop are slab poured over gravel base within block walls. Center of that section has a thickened area within the slab with rebar, to support a load bearing wall that carries weight from the second floor above.
Woodchuck, you probably already know this, but make sure you put in a good swale about 4-6' from the house and slope away from walls, so that the french drains aren't the local low spot for surface water. I like to think of french drains next to a foundation as the last line of defense, not a primary line of defense! I have seen people put in french drains next to their walls on a completely flat property, and to me all that does is invite the water to flow down next to the foundation.
The other thing I did on our home was to put in shallow french drains under all the roof drip lines, so we could avoid having gutters. They are basically ground gutters, since I lined the bottom with plastic sheet before the septic paper and gravel went down. So far they are working great and do a nice job carrying rainwater away from the foundation. I have a healthy slope on my property so it was pretty easy to make all these ground gutters run downhill to move the rainwater away from the home. This wouldn't be so easy with a flat property.
