What you're referring to is similar to an "unrolled linked list" (Wikipedia ref). As you mentioned, search and iteration performance can be much better with an unrolled linked list since it's more cache friendly.

As a hybrid solution between a linked list and an array list, it inherits some of the benefits, and some of the downsides of each implementation. For example, consider insertions in the middle of the list. Let's say the "bucket" that you need to insert into is full. So, you push the last element of that bucket to the next one. But that bucket is also full. And the next bucket is full. Either you keep moving elements around until you reach a non-full bucket, or you end up with a non-empty bucket in the middle of the list, leading to fragmentation or wasted space. This is no better than an array list.

So in short, it's situational. If you know you need fast random access and won't need to resize the list often, then array list is probably better. If you know you're going to be removing or inserting elements in the middle of then array often, then maybe a plain linked list is better. Considering that linked lists and array lists are sufficient for a lot of use cases, using unrolled linked lists may not be worth it (considering the fragmentation and code complexity introduced).