It is fantasy to think it would work that way. Newt is shilling for the political class, and this is just a wedge that will eventually lead to full citizenship.
I think you hit the nail on the head with any plan to deal with illegals.
The problem, however, isn't legislative will but court interference, which is the cause of most of our problems.
And that's what we should be talking about regarding illegals, and just about everything else.
I'd have no problem with supporting something like the federal DREAM Act IF it was done in conjunction with a national Prop 187 binding all levels of government and pre-approved by the Supreme Court, AND the overturning of Plyler v Doe
Fantasy? Sure, if it's not on the table.
If it goes on the table, however, the whole debate shifts a lot and it's the Atzlan/living Constitution/open border crowds that go on the defensive.