It most definitely works. This is my new preferred way to play my engineer. You can keep track of the # of revenge crits you have racked up in the bottom right corner of the default interface above the ammo counter. One of the nice advantages of using the mini-sentries with the Frontier Justice is the ability to blow up your sentry intentionally to get the crits, since rebuilding mini-sentries is quick and cheap. It's an effective way to provide your team with additional offensive prowess: critical shotgun shots do a significant amount of damage.
Keep in mind that you get 2 per kill, 1 per assist, and your mini sentry is much more likely to get an assist than a kill due to it's lower damage output.
I think a key thing as spy is to avoid groups completely. If you reduce the chances to bump into someone then it will make life easier.
I think spies work best when they are trying to pick off the people at the back of the lines, whether it's people running from spawn, or engineers or people going back for health. Kill, cloak, hide.
If you're in a situation where, when cloaked, you're trying to get through a group of enemies, either following, or running through the front line to get behind the enemy, then I highly recommend jumping from side to side. Being able to reduce the area of possible contact with an enemy is the key.
When disguised there is a little bit of timing involved, as well as a clear plan. You need to look like you have a definite movement, nothing gives away a spy as someone just running around after another person. If you attack when they are attacking then it's easier to blend in and not look suspicious.
I do my attacks as spy in a forward motion. Cloak, get in behind the lines, disguise, decloak, run forward with the enemy attackers and attack. No matter the result, I push through to my team-mates, heal and resupply. Rinse and repeat. Obviously if your using the cloak and dagger or dead-ringer then it's different.
There is a huge slice of luck involved with tracking and pushing through as a spy as people are a little unpredictable and sometimes you just get unlucky.
Best Answer
(90% sure but this evening I will test it)