It is my understanding that single phase power requires a closed circuit for power to flow. An open 'hot' and a closed 'neutral' will acomplish this. When the main breaker is turned off, it effectively disconnects the house from street power, otherwise it wouldn't be called the 'main.' Power simply cannot flow through the neutral alone. Even in the generator were to have the neutral and hot wires reversed, one wire to the street is still interupted. I agree that a disconnect switch would be better, but it is not necisary.
I am not an electrician, however a certified electrician wired my house for the type of patch cable you are describing and the local code inspector passed the installation.
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