Except it fails at step 1. If you have to breakdown a “Ajax photo editor” into 16 hour max chunks, as stated, you need a detailed design. And that takes times in itself. The problem is, often times, the manager want the estimate before you've taken the design time because, to them, it should be included in the estimate.
Yeah, if you have a non-trivial big project that you don't know how to do yet, then the only thing you should be estimating is "Create a design for project X". After that, you might need new tasks "Create a design for sub-systems Foo and Bar". Until you have spent time on design, there's often no point estimating the total project.
