In the field we often hsd to cut short nipples (down to a 1" x "close" nipple at 1-1/2" long. That's pretty short considering that each thread is 1" long.
Our threaded pipe is 1" to 2" . 2-1/2" and larger are usually shop cut, if needed at all. We don't use smaller pipe much in fire protection, except for trim on some valves. Bigger pipe is usually grooved. In fact, I usually would groove 2" pipe also. 2" just tends to have more leaks when threaded.
We used the same method that you show, with a couple of refinements. We carried a set if these nipple chucks in our trucks, they were preferred over the Rigid nipple chuck mostly.
The best coupling we found were the ones used by electricians. The threads go straight through and aren't tapered like pipe threads. They last forever.
The best secret is to cut the threads on the nipple chuck pipe long, so that they go through the coupling and only leave 4-5 threads showing on the receiving side. Since hand tight is 3-1/2 threads, that leaves just1/2 to 1-1/2 threads to bottom the coupling out. This makes the nipple easy to remove without having to wrench too much. It still can get pretty tight, jammed against the other pipe in the chuck.
We used pipe because that is what we had available. If I was going to make a great chuck I would use solid stock for at least the end of the pipe. I think it would make a better face to run the nipple up against. Welding a plug inside the end would work well.
The most threads I cut in one day was just over 1500. It was on a Swift-Mercury threader with a Landis head. Automatic chucking with a foot pedal. That was in the shop though. I spent quite a few days cutting droos. That job sucked and was extra dirty too boot.
The drops I was referring to are the droos down to sprinkler heads. We used to cut them long when installing the pipe. When the ceiling was in we would go through and cut tge droos to fit. When there were several men on the jobm and just one power machine, one person woukd have to be the "cutter." Usually the lowest rank apprentice got the job. Cut threads as fast as you could as the other guys brought marked drops to you. If you were close you would run and get the drops where they were laying on the floor and run them back after cutting them to length.
Chilly