This could certainly be a boondoggle, but reducing flow through a dam is limited to storing excess power at the natural flow rate of the river, whereas there is no limit in principle to how fast you could pump water from a big reservoir below a dam to a big reservoir above the dam, or how fast you could draw energy from greatly increased flow through your generators. So pumped hydro storage isn't an inherently silly idea.

Those generators and flow valves likely cannot respond quick enough to the momentary power surges