The general idea is sound, but China still need to present itself as tough and strong in the face of continuous salami-slicing by the USA. I would say that China is being forced to.China shouldn't react to American provocations by trying to outdo the Americans. Instead China should take the opportunity to initiate actions that further its strategic goals. As Mao was saying, "you'll fight your battle, I'll fight mine". Be proactive, not reactive. Pelosi's visit is major provocation that will create a rally 'round the flag effects on the Chinese populace to benefits of Chinese government. If China tries to outdo Pelosi by, say, intercept her flight, that will create a rally 'round the flag effects for Pelosi and even Biden. That's her plan. Don't let her succeed. China should take advantage of the rally 'round the flag effects in China while deny the same benefits to Pelosi and Biden.
For example, Xi could take the opportunity to consolidate support for higher military spending. Hu Xijin and Jin Canrong had already called for increased military spending. In doing that, they really did break the rank. It's long been taboo to openly call for increased military spending, and vested interests are against such increases (e.g. what I call China's Infrastructure-Industrial Complex, made of private and state-owned companies and government officials on levels). This would be a perfect opportunity to gather political and public support for substantially increase the military budget. What's going to happen to Pelosi politically in U.S. if her trip only results in photo ops for herself and Xi Jinping consolidating power at the expense of Chinese doves?
China has backed down/not taken any action multiple times for so long, in the face of blatant provocation and violation of the One-China Policy and One-China Principle by the US. Now may be the time to finally put the foot down.
If China did not take any solid action this time around, how would the CPC explain to the populace of China, who are increasingly in favor of tougher stances against Taiwan and the US?
Remember that this particular situation came at a crucial time for Xi, with the Party Congress to be held later this year. If Xi wants to have a 3rd term, he needs to act tough and decisive in this confrontation with the US - without causing a war as best as possible.