It depends on what your goal is. If your goal is just to help your dog enjoy the leash, then letting him sniff and explore are totally fine. If your goal is to help him enjoy the leash AND teach him to heel, then I think you're on the right track.
I work with my dogs to heel and just walk nicely. They are allowed to sniff and explore when I don't ask them to heel. I taught them to heel in a similar fashion to what you're doing. All positive reinforcement with treats when they get it right, and simply ignoring or redirecting when they get it wrong.
Have fun with your dog!
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