I use a mechanical interlock like you have described and I actually prefer it to a more complex ATS. I like simple systems.

But you can, in fact, see when utility power comes back on if you have a "smart meter" - the LCD panel readout is dead/blank during the outage but is active and displaying once the power comes back on.

So we just peek at the meter every once in a while to see if PG&E is back ...