I routinely sparge until I get to boil volume, the continue until the runnings are no longer sweet. I use those second runnings as smaller, experimental batches (10l ~2.64gal), mainly using herbs, spices, wild hops picked while hiking etc. If OG is not high enough, I add some honey or similar stuff at appropriate times during the boil. Worked out well so far.
Do you get any tannin extraction that you notice from sparging to such a low gravity? Most fly sparging is supposed to stop at the 1.015 mark right?
This is news to me. I guess I wouldn't notice a lot of residual sweetness at 1.015 after successively tasting wort that's less and less sweet though. I think I might actually take a reading next time. No tannin taste I could discern. However, I mash out and then let the sparge water cool down a bit (read: I take the pot containing the sparge water from the stove), maybe to sacc rest temp. It was my understanding that lower temperatures can help reduce tannin extraction. Also, I use what is described as "hybrid" method in the AG forum (don't know how to make a link on my phone, but the thread describing the technique is a sticky). This makes temp control in the grain bed during sparging difficult and I suspect that it is relatively low.