How to locate most important literature in an unfamiliar area
The process you are currently using was the basis of my process. Unfortunately, I do not know of any real systemic way. I always found important papers way later that were disconnected to the main body of work. 

Here is what I did, using the Papers app (for Mac), but subsitute any paper repo of your choice:


Find the top few highest cited papers in this area; usually these
can be found easily or from pointers from others
Scan the references of these papers to find papers they cite in
common or papers with titles that look very relevent; these are likely prior works that are also relevant
Use Google Scholar to find highly cited papers that cited the
papers found in 1
Repeat 2 on those references list


...
stop when exhausted.