The way I'm doing it now is going through and writing each kanji once as I read it and try to remember the story. When I get about 40-50 done I add them and review them. Part of me is telling me to do at least one review of all of the kanji everyday which is how I did it the first time I tried it the book. I didn't get very far but those kanji I did stuck like glue. However the recommendation on this site says it defeats the purpose. Do most people on this site only review on this site or do some use some type of mini review in between?

Read on about the Leitner System:

http://en.wikipedia.org/wiki/Leitner_System

Or watch this video for info on memory (and Anki):

http://www.ichi2.net/anki/screencast1.html

These show why reviewing every card every day is not really worth the effort, or worth your time. If you're really concerned though, you can download Anki and adjust the amount of time that the cards are spaced out, more or less time between reviews, depending on your preference. Good luck.

-edit-

Though, I think you're on the right track concerning your study habits before reviews, so I wouldn't worry about that.

From what I've read, people usually only review the kanji in Anki or with the flashcards on the site. (I personally use the former.) Either way, almost everyone (if not everyone) uses the site for the stories.

As for reviewing, it's generally wastes time if you try to review each kanji everyday, especially when you get to higher levels. (Consider doing this when you reach around 1000. Yeah, not practical.) Besides, you're not supposed to use rote memorization to remember the kanji anyways. If you need to review in this way, that means your stories are too weak. I would suggest letting the system on this site (I'm assuming you're using that one) schedule the reviews for you.