After a slip up on the first try (before a change in method discussed) i have successfully used this! No problems booking or throughout the stay. Used a cash deposit on check in.
Will be using again!
Method-
Once you receive your purchased account, log in and immediately redeem your free night at your hotel of choice (Do not change email as this can cause problems). Pay the upfront taxes etc with a prepaid CC or a hotels.com gift card. Once booking is complete (take note of confirmation number) and payed DELETE the hotels.com account completely.
Upon checking in to the hotel i was asked for photo ID (used my own of course) and payed the deposit with cash and no no problems throughout.
No problems checking out and receiving my cash deposit back!
Can't wait until the next one!