Long and short vowels must obviously be distinguished. I think either yōko or yooko are fine. Either Tōkyō or Tookyoo will let a beginner pronounce the word correctly. Some prefer youko and it works fine in almost all cases too, but perhaps there's no real value in clinging to the accidental way with which hiragana happens to represent long vowels; it isn't inherent to the language. Besides, there's a small added benefit in disambiguating real [ou] pronunciations like omou.
Your point about visiting Japan is well-put. There's no arguing with the fact that anyone who wishes to understand Japanese should learn kana and kanji. But I think that there's a real value in putting emphasis on the spoken language first, and a well-developed minority tradition of teaching Japanese like this in a serious manner, not as a crutch. E.g. Eleanor Jorden's JSL textbook follows this principle, as do a number of other textbooks and guides.
"To get started in learning to read modern Japanese along the correct lines, it is essential that first of all you have some knowledge of the modern spoken language. This is so important that it is well to emphasize it strongly from the beginning - contrary to what you may think, you undoubtedly will not make the best progress in learning to read Japanese by starting in your study of the language directly with reading and writing in the Japanese script. Some previous work with spoken Japanese is essential, and the better your grasp of the patterns and the forms of the spoken language, the faster and surer will be your progress with the reading materials in this book" (Roy Andrew Miller, _A Japanese Reader_).