Actually, LttP does it exactly like the OP:
It's a slightly altered tile though, to help it merge into the corner of the cliff, but it doesn't address the abrupt cut-off. Either way I tend to do it the way Callimuc does it because in my opinion that looks better than cutting off that tile.
Typically though, I recommend adding additional tiles via addtiledef2 or such to fix errors like this. Level makers should familiarize themselves with working with tile definitions, and if possible, editing tiles and creating fixes when possible. Pics1 is a horribly broken tileset, and it's even missing some important tiles... instead of sitting there trying to Frankenstein tiles to get something that "sort of works" you could have easily taken the tiles and edited them/fixed them into something much more appealing. It makes you a better level artist if you take these extra steps with your levels, and it makes you capable of more.