This is actually a recognised saber technique, described in The Jedi Path : A Manual for Students of the Force) as 'Trakata' or 'Passing the Blade'
As to why it's not used more commonly, the answer is that it's a risky (and highly advanced) technique that seems prone to failure.
The Star Wars Wookiepedia page on Trakàta describes a number of occasions on which it has been used. Note that all examples are from non-canon sources such as the EU novels and comics:
Members of the New Jedi Order known to employ this technique include
Jedi Master Mara Jade Skywalker. Jedi Master Corran Horn used a
variant of this technique during the Yuuzhan Vong War, one notable
occurrence being while he was battling Shedao Shai on Ithor. During
the battle, Horn and Shai were locked in combat, and Horn deactivated
his lightsaber, then reignited it into Shedao Shai, killing the
temporary Supreme Commander.
During her duel with Ben Skywalker,
Sith apprentice Tahiri Veila used this technique to great effect.
Skywalker forced her lightsaber aside, so Tahiri switched her
lightsaber off and on so fast Skywalker barely had time to react,
allowing her to extend the blade to where his throat had been just