HMAC-SHA1 is not broken as a pseudorandom function. SHA1 is only broken for collision-resistance for the moment. That doesn't mean it's great, or that you shouldn't upgrade.
Do you think that the technique of using the last 4 bits to choose a further pseudorandom 31 bits from the rest of the hash MIGHT mitigate SOME future weakness as a PRNG? Or do you have confidence it is completely useless? Or neither, of course.
I think it's weird. Either you trust your output to be pseudorandom or you don't. These weird hacks may be fine, but they feel like adding "safety" duct tape onto the wings of a passenger jet.
But has anyone actually reaserached this? For all we know, using hma-sha256 in TOTP may actually make it less secure.