A trick I've seen recently is to strap your headlamp to a solid water bottle with the light pointed into the base of the bottle.
Lay the bottle on the side and you have a substitute for a lantern.
The plastic and some water act as a poor-man's diffuser.
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My own preferred method is to use a UCO candle lantern attached to the loop in the ceiling, it generates light that radiates outward, and also generates enough heat to make the tent enjoyable when you're settling in for the night.
I combine the above with a headlamp for personal reading.
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When I was younger, I had a flashlight where the cone part pulled out and it became essentially a lantern.
I would tie it to the top of the tent (most tents I used had a hook there), and that provided good light throughout the tent.
Lacking that, if you have a Maglight (or, I'm sure, many other brands), you can screw the cone off that for essentially the same effect, though you'll have a bright spot and you can/should really only do this with one of the smaller, lighter ones.
Beyond that, your method does sound reasonable.
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Some of the Mammut headlamps can be fitted with an optional diffuser for ambient lighting.
Haven't tried it, but it looks like it could be a neat solution.
Mammut TR1
Headlamp
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My tent (REI Quarterdome) has mesh pockets on the ceiling – I find stuffing a headlamp up there is a reasonable space lighting solution.
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Our smaller tent is a dome, the top has a smaller mesh square that clips inside it.
I put one of those puck style led stickup lights in it for a light.
Our bigger tent is a 2 room tent that we never use the divider in.
I use the clip that's supposed to hold the divider to hold either a head light or one of the smaller battery lanterns.
A clear gallon water jug with either a stickup light or a headlight under it throws a lot of light.
So does a zip lock bag full of water but that can get messy.
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Usually when I require light inside the tent I just prop a torch  (flashlight) up somewhere, if it's bright enough then up at the roof of the tent the reflected light gives a nice ambient glow. Has anyone got a preferred / better way of doing this? I'm curious both in terms of utilising existing common equipment, such as torches, and in terms of any new or unusual lights that might be used specifically for this purpose (or others of course.)
Best way to illuminate a tent?
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outdoors.stackexchange.com/questions/1080
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Some of the Mammut headlamps can be fitted with an optional diffuser for ambient lighting. However, a clear water jug with either a stickup light or a headlight under it gives a lot of light. A UCO candle lantern gives off a light that radiates outward, along with some heat. Some flashlights  also have a convertible lantern function. Water bottles and jugs can be used for lighting purposes. Also, lamp diffusers and ceiling loops can be used to light tents.
Lamps can be strapped to diffusers and ceiling loops. Water jugs and bottles can be used to project light.