Perhaps I'm dense, but I just don't see it. If they taught it, then I imagine it must have worked, so I'm probably misunderstanding you. But what about these cases?
In both cases, the sub turns to put the target on its beam, and in both cases it can adjust its speed to keep the target there, but in neither case will it ever intercept, no matter how slow the target is going.
Anyway, these examples call into question my own approach as well, since they show that it's possible to keep the target on a constant bearing without being on a lead pursuit course, even if one exists. If you overshoot by too much you might wind up on homing in on one of the constant-bearing courses that isn't an intercept course. (But I think it's less likely to occur with my 'algorithm' since you start out pointing yourself at the target.)
@Aktungbby: Thanks for the welcome. :-)