We investigate the competition between spin supersolidity and phase separation in a frustrated spin-half model of weakly coupled dimers. We start by considering systems of hard-core bosons on the square lattice, onto which the low-energy physics of the herein investigated spin model can be mapped, and devise a criterion for gauging the interplay between supersolid order and domain-wall formation based on strong-coupling arguments. Effective bosonic models for the spin model are derived via the contractor renormalization (CORE) algorithm and we propose to combine a self-consistent cluster mean-field solution with our criterion for the occurrence of phase separation to derive the phase diagram as a function of frustration and magnetic field. In the limit of strong frustration, the model is shown to be unstable toward phase separation, in contradiction with recently published results. However, a region of stable supersolidity is identified for intermediate frustration, in a parameter range of possible experimental relevance.