For foreign language, Pimsleur follows this method.
The way I envisioned implementing this in Moodle is to put my questions into cateogries "Lesson 1", "Lesson 2", etc. Then use the review quiz plugin (don't remember the exact name) to create all encompassing quizzes for review.
I was also going to have 20 question quizzes. 10 would be new material. 5 from the last 5 lessons, and the last 5 from any lesson before that. I have not tried to setup a quiz yet, but from what I have read, the add random functionality that is build into the Moodle core can handle it.
I also think that as a person works with Moodle their question bank will be better at handling incorporating previous material into new questions. Although, I am thinking in terms of reading lessons, listening skills, and foreign language.
Also, from what I read about the Pimsleur method, spaced repetition is not based on if the student gets a certain answer correct or incorrect. It is based on introducing a topic, reviewing it 5 minutes later. Reviewing it an hour later, review it the next day, reviewing it in 3 days, reviewing it the next week, reviewing it in 2 weeks, reviewing it the next month, randomly throwing the material in.
The whole point is to increase the number of times that a student is exposed to a certain word. At first it will be "that sounds familiar", then it is more recognition, until finally it is truly knowing the word that it is a part of the student. For some student that can happen in 5 exposures to the word, while for other students they may need 40 exposures to the word.
Melissa