It is painstaking and tedious, but it works. I look back on that time, the first few years I played, and I am genuinely surprised at some of the difficult songs I worked through in this way.
But now, over 30 years later and still playing regularly, I almost never do a note-for-note transcription of other peoples playing. I tend to either just get the gist of the harmony and melody by listening and get into the general ballpark. I often use ultimate guitar or other tab sites just for an outline of the chords (or download sheets from real books for jazz).
But my aim is always to fully memorize a piece, from beginning to end, so I can play it without any reference. That, for me, is the goal. Any way I get there (tabs, sheets, ear, demonstration, etc.) works fine in my books.