Is this the proper procedure for attaching a mosaic to the wall?
I've never done or heard of this, but most of my small tile work has been with presheeted tiles

I did read about a mosaic system where the layout was done face up and a mesh was attached, and the tile was thin-setted and afterwards grouted.

I've also seen a TOH segment where the mosaic was attached to a thin cement board (1/4"), grouted and then the whole assembly thinsetted in place. 

For me, grouting from the back would mean that you couldn't know or change the amount of grout that was pushing around the mosaic.  Normally, cleaning the tile of extra grout would be done in 20 to 30 minutes, before it is set solidly.  

This method would let the front face be flat and the variations hidden in the back.

What would you glue the tiles with?  I assume some type of water soluble glue...

Found a tutorial here this is similar to your method, called the indirect method.  Do the reverse attachment to paper, install the tile on the wall (floor?), let dry and THEN grout.  This makes more sense to me and overcomes what I see as a potential problem area, not being able to control the grout removal.