It's been in use in one form or another for decades. Here in the UK compressed air systems were popular in the 80's upto the mid nineties, but have fallen from favour in recent years, and these days you see more boats based around water pump or piston tank systems.
The main snag is you can't trim a boat as accurately as you can with a piston ballast tank or one based on a water pump like the OTW. With the boat in submerged trim, ideally the bag/membrane should be completely evacuated of air, as any residual air left in the bag will compress as you dive deeper, throwing out the trim of the boat. If you stick to shallow operation e.g. within a couple of feet or so, then the pressure is so slight it barely registers any noticeable change in the boat, and it's possible to run with an air bubble in the tank. However if you get the opportunity to dive in deeper waters, e.g. a swimming pool, you will notice the boat fails to maintain depth, so it's worth knowing this disadvantage I think.
With piston tank systems, there is no air bubble to compress, so you can actuate the piston for different ballast volumes to allow for different water densities or if you want to bottom the boat. With a water pump system, provided it is shut off with a valve, the air bubble inside the tank is isolated from outside water pressure, so unable to compress. Therefore you have the same level of flexibility as with a piston tank system, but minus the option of proportional control and you also have to compensate for a tank with an exposed water surface.
In a nutshell, the compressed air system is simple and fairly cheap, but you trade a little flexibility.
Every ballast system has it's pros and cons. You can sometimes get the best of all worlds if you pick and mix ballast systems, these are known as hybrid systems. An example would be to match say a compressed air system with a small piston tank. Compressed air is excellent at moving large volumes of water quickly and efficiently. Unfortunately, it's not very easy to trim and manage small volumes with it. A piston tank is excellent at this task however, and if the tank is small e.g. 100cc (4 ounces) or less, it's possible to use a servo to actuate the piston, with a little modification. As servos are incredibly inexpensive these days, you can obtain all the advantages of a proportional piston tank system without the bulk/weight and price tag.
Unfortunately no commercial dive modules exist using a hybrid ballast system, which means the builder either has to try and adapt commercial items, or scratchbuild. Not many modellers are prepared to go to those extremes, which is why you don't see many of these systems about.
If you want an example of this type of system in operation, you can take a look at the German modellers 'Pressluft' boats. These are very large boats which typically displace about 50-100kg submerged, real behemoths. The main ballast tank which is usually several litres in volume, is controlled using compressed air. The main tank is vented at bottom, and features magnetically controlled valves at the top, these are opened, allowing air to escape as the water floods in at the bottom. Two piston based compressors are set-up in parallel to pump air into a reservoir, often mounted in the bow of the boat. The air is drawn in through a snorkel mast and stored at about 90 psi. The reservoir is usually sized to allow for two blow cycles, and failsafe control systems are in place to prevent the boat diving if sufficient pressure isn't detected in the reservoir.
To surface, air is released from the reservoir via a magentic valve and regulator, the latter is there to limit the pressure to about 20psi, and into the ballast tank where the water exits out of through the vents at the bottom of the tank whence it came.
Twin piston tanks are sited either side of the C.G, and are generally volumed for about 1-2% of the boats overall displacement, which is about 1 litre (two tanks 500ml each). This allows the boat to be trimmed for differing water densities, operation of these tanks need only be carried out once in order to trim the boat to a neutral state (usually just a few ounces bouyant), and subsequent dive cycles carried out solely using compressed air.http://www.zentrale.pressluftjunkies.net/index.php/en/
Although these are large boats, the principles used can be miniaturised and used in more modest sized boats. The biggest obstacle is the lack of an off-the-shelf miniature piston based compressor. However if you're prepared to accept a lower pressure system, the small diaphragm based compressors readily available could be used instead, and the main cylinder itself used to store air at say 8-10psi. This would limit the depth you could safely dive and surface to about 20 feet, but it removes the need for a separate reservoir, regulator, pressure switches etc. The depth limitiation will probably be enough for most modellers.