I layer off the tops of trees or use layering with soil to shorten trees all the time. As long as the medium holds moisture and is WELL AERATED, it will work fine.
Here's a tree that's being shortened via layering (on right):

I replaced a bad root system on this tree because the old root system was unsuitable for bonsai. You can still see the wire tourniquet and where the new tree was separated (just below the wire) from the old trunk. It was layered off in the gritty mix.


Here's how I prepare a tree to be layered off



The holes were drilled with a brad-point drill and will be filled with rooting gel. The zip ties constrict the downward flow of carbohydrates as the trunk thickens. The trunk swells significantly with stored carbohydrate and auxin immediately above the constriction, which promotes rooting. I like this method much better than wounding/girdling. I generally just use the gritty mix & make sure it stays moist. You can do the same thing with branches. I use it because it produces a perfect root buttress, which is greatly valued in bonsai - for that, it can't be beat. For my taste, it's too much of a hassle when all you need to do is clone plants that come easily from cuttings.
Al