I like the idea of using the OUTPUT clause but I have this bad feeling about the example. Perhaps there are requirements that justified doing things this way (insert all parent rows then insert all children), but I think this will cause problems with concurrency.

It seems we are always "fighting" against such requirements as "add all records to the database; rollback all changes for the batch if any errors". When the batch gets large, the locking may escalate to table locks. How large is a dynamic that is based on resources at the time.

I guess my point is to be aware that, if you can, try to make the unit of work one master and all its related child records.