It had the effect intended...
Interesting responses. Thank you, everyone.
First of all, let me just say that I was the one who presented this to my players. It's not a demand they made of me, but a demand I made of myself (for their benefit).
Its effectiveness all depends on how you present it...
For example, if you precede it with the claim that "everything is prepared in advance. I don't make things up in-game or change them as I go. That's dynamic scaling, and that's cheating! If EVER you think I am dynamic scaling or modifying characters as I go, you need to call me on it. (Except ad libbing character and creature actions, of course, which are played out according to their respective personalities)."
After awhile the players truly believe everything is prepared in advance, and it adds a sense of awe to their whole gaming experience.
Everywhere they go, everything they encounter, and somehow the DM knows it all.
"When do you find the time?"
"Get a life, dude."
That's the effect I was alluding to.
Sorry I wasn't more explicit.
And it has served another (unexpected) purpose as well. On two of the three occasions in which I was called out, it was in relation to a PC death. When the PCs saw that the items or spells utilized to kill them actually were on the NPCs' sheets, it took all the air out of their heated accusations that I killed them on a whim. It's amazing how players can freak out after their PCs' first death. The despair. The frustration. The desperation and desire to turn things around on a technicality. After all, for some of them, role-playing is their great escape.
So they look for a fall guy: The DM. "You did it! YOU KILLED ME!" I never realized until those moments just how absorbed players could get.
"No... the Evil High Priest did that all on his own. I had nothing to do with it, as I'm just an impartial referee who runs things according to their design. Here, look..."
So the rule helped calm them down, giving me time to explain that "with a constitution of 16, you can be raised or resurrected 16 times!"
With their trust firmly established, they went on to bigger and better adventures. I got not a peep out of them when they met an Arch Devil whose minions had been stalking them from the Astral Plane for years (which finally explained why resurrection had stopped working for their group - each time one of them was slain, the soul was abducted by horned devils on the Astral Plane, and taken to Hell. Luckily, they only lost one PC that way, the rest being NPCs.) I scared them so bad with the appearance of Baalzebul that two of them turned green. That's something I had never seen before.
Yep.
Green.
transcendation