I really dont understand why you call them useless, they have always worked for me when used correctly (i.e. not near the camera, or beyond the clipping plane or frustum). I just havent seen this problem you are mentioneing, unless it was caused by the above situations, nor can I figure out why such a problem would occur technically.

The reason for the normal failures is the way z-pass shadow volumes work--if the camera enters a shadow volume, it will inverse the results, and there is no easy way to tell the renderer if the camer ais in fact in a shadow volume.

The way to solve this is of course the z-fail method. The z-fail method requires additional "caps" for the shadow volumes, which can dramatically increase the filrate requirements, so in my opinion is best implemented using vertex sahders and a special shadow mesh.