Can this theory on the evolution of human appearance be flawed?
Quantitative genetics is one reason why this doesn't happen. For example height is affected by many genetic loci, not just 1 gene, and we can for the sake of the following illustration call them Locus A through Locus J - 10 Loci. 

Now this is purely illustrative and hypothetical - in actuality there are some differences between this example and the real world, but nevertheless I shall plough on. Imagine everyone carries a basic set of genes which makes them 150cm tall. Loci A-J each have two alleles, either T or t, with one inherited from each parent. Each T allele adds 2.5cm to the basic height per copy (each parent has two copies, one goes to the offspring) and t has no effect. The parents are both heterozygous at each loci, that is they have one T and one t at each pair of loci. Therefore both parents are 175cm tall.

When these parents mate the offspring inherit one copy of each parent at random. As such the most likely single outcome is that the offspring will inherit 10 T's and 10 t's - roughly five of each from each parent. However, purely by chance they could receive 10 T alleles from each parent, giving them a height of 150+(20*2.5) = 200cm. Likewise, a sibling could also inherit only t alleles thus giving them a height of 150+(0*2.5)= 150cm. Thus variation can actually increase from one generation to the next.

There are other reasons why we do not regress to the mean as well, but I am writing a quick answer over breakfast, but I will be in the office soon where I can get some more thorough explanations from text books. E.g. (Dis)assortative mating, Mutation, Recombination, Environmental variance, Selection. However, with the increase in global movement it has become easier for dominant alleles to spread which is why the number of blue eyed people in the US is decreasing. 

Here is an interesting article which backs up what I said about quantitative genetics, called "Will humans eventually all look like brazilians?" Also for good quantitative genetics texts take this as a basic intro and this for further reading.