rbulsara,
You state this is incorrect, but the priciple is applied currently by multiple manufacturers including Siemans and Schneider Electric, with three phase, three wire systems. And I assure you, they do work. If you wish, I can find one of their drawings for this system utilizing a zero-sequence CT. Though it might be early next week when I can post a file of it (I do not have it with me here in the field).