My current hometown uses paper ballots that we mark with black pencil or black ink, then each voter walks up to the tallying machine and places his or her own ballot into it and the machine reads the ballot and tallies the vote. We are signed in before given a ballot and signed out just before we place our ballot on the tallying machine.
I like better the sound of the system you describe.
If there were poll watchers there who observed any miscreants then still everything could be properly documented and reported. It sounds like a good system.