I tried it when I was young.
The usual child excesses, filling the glass to the brim with ice cubes and then adding whatever beverage.
Agree with you that at first it tastes good, but soon degrades into a diluted, not very tasty anymore, kind of watery remainder.

So nowadays I prefer the "just cool the drinks really, really down" alternative, e.g. at barbecues putting the bottles in a picnic cooler filled with cool packs.
Best of both worlds.

An exception might be drinks deliberately concentrated to counter the dilution effect, like is done in the US for iced coffee, if I understand it correctly.
That sounds sensible again and I might give a try!