I'll bet it roots just fine, even without girdling the wood. I would add foil around the cup so the sun doesn't burn the roots up. I would also ensure the top doesn't allow for too much rainwater to enter.
I moisten the mix beforehand and never add water thereafter. I don't compact the mix, but I tap it pretty good just to make it snug. Monitor the dampness of the soil though, as your climate is different than mine. Also, you will need 4-8 weeks of active growing to achieve roots. Then, after removing the air layer, a couple weeks of acclimation to the pot will make it more stable before it goes dormant.