I'm not sure it's a "much better solution" as it doesn't solve the same problem (it does front-only matching and no reordering), but it is a similar solution for a similar problem.

http://stackoverflow.com/questions/2382497/jquery-autocomplete-plug-in-search-configuration

I am trying to get this to work, but I guess I'm doing something wrong.
Wcich version of autocomplete are you using? I suspect that the newest version don't have the source option..

Do you have a complete codesample for this?

It's important because you don't want jQuery to cache your results. For example, say one of your values is "catacombs", and you type a 'c' and then type an 'o'. After the first letter the value should appear near the top of the list ('catacombs' starts with 'c'), but after the second letter it shouldn't ('catacombs' doesn't start with 'co', but has one internally). If you have 'matchSubset' set to true (the default), Autocompleter won't invoke the source callback if you ADD letters (it will refilter internally). Since I want to regenerate every string, it's imperative 'matchSubset' is false.

Why is it important?