That's a great description of how to go about sending off flyers. I might have to use that. And Jeremy, you're completely right about the need to qualify leads. Sending ads to people who won't buy your product even if they read the entire thing is useless!
Sonni is right, you need to offer people something. Just handing someone a piece of paper is a burden and an annoyance, but if you can find what people want and give it to them, you're helping them out. If you're knocking doors, just say, "I'd like to invite you to a free seminar I'm hosting on ____" Then, if they're interested you give them a flyer. If not, thank them and leave.
I think that you can use offline marketing to get extremely targeted traffic. I have been toying with the idea of using a flyers at local gyms to market some affiliate products as well as one I created myself. Send the traffic to a squeeze page or an affiliate link and monitor the results. Has anyone tried this or had success?