I like it because it's pretty easy to use, however it's not fool-proof: if the editor which you use for editing the env vars is crashing or killed suddently, it will leave a "temp" file with the decrypted vars on your computer. Also, if this same editor has AI features in it, it may read the decrypted vars anyways.
I prototyped a solution where I use an external debugger to monitor my app, when the app needs a secret it generates a breakpoint and the debugger catches it and then inspects the call stack of the function requesting the secret and then copies it into the process memory (intended to be erased immediately after use). Not 100% security but a big improvement and a bit more flexible and auditable compared to a proxy