This problem is also an exercise in McMullen's "Trig Identities". Here is the book’s approach ( with hints from the author).
The start is similar to the OP solution.
Show:
$ \displaystyle \cos x + \cos y = 2\cos(\frac{x+y}{2})\cos(\frac{x-y}{2}) = \\ 2\cos(\frac{x}{2}+ \frac{y}{2})\cos(\frac{x}{2} - \frac{y}{2}) = \\ 2\left [\cos \frac{x}{2}\cos \frac{y}{2} - \sin \frac{x}{2}\sin \frac{y}{2} \right]\left [\cos \frac{x}{2}\cos \frac{y}{2} + \sin \frac{x}{2}\sin \frac{y}{2} \right]$
Now multiply the two terms.
$ \displaystyle = 2\left [\cos^2 \frac{x}{2}\cos^2 \frac{y}{2} + \cos \frac{x}{2}\cos \frac{y}{2}\sin \frac{x}{2}\sin \frac{y}{2} - \cos \frac{x}{2}\cos \frac{y}{2}\sin \frac{x}{2}\sin \frac{y}{2} \cos \frac{x}{2}\cos \frac{y}{2} -\sin^2 \frac{x}{2}\sin^2 \frac{y}{2} \right]$
Simplify, by adding like terms
$ \displaystyle = 2\left [\cos^2 \frac{x}{2}\cos^2 \frac{y}{2} -\sin^2 \frac{x}{2}\sin^2 \frac{y}{2} \right]$
Key step : Distribute $2$ and expand
$\displaystyle = \cos^2 \frac{x}{2}\cos^2 \frac{y}{2} + \cos^2 \frac{x}{2}\cos^2 \frac{y}{2} -\sin^2 \frac{x}{2}\sin^2 \frac{y}{2} -\sin^2 \frac{x}{2}\sin^2 \frac{y}{2}$
Apply the pythagorean identities
$ \displaystyle = \left( 1 - \sin^2 \frac{x}{2} \right)\cos^2 \frac{y}{2} + \cos^2 \frac{x}{2}\left( 1 - \sin^2 \frac{y}{2} \right) -\left( 1 - \cos^2 \frac{x }{2} \right)\sin^2 \frac{y}{2} -\sin^2 \frac{x}{2}\left( 1 - \cos^2 \frac{y}{2} \right)$
$ \displaystyle = \cos^2 \frac{y}{2} - \sin^2 \frac{x}{2}\cos^2 \frac{y}{2} + \cos^2 \frac{x}{2} - \cos^2 \frac{x}{2}\sin^2 \frac{y}{2} -\sin^2 \frac{y}{2} + \cos^2 \frac{x}{2}\sin^2 \frac{y}{2} -\sin^2 \frac{x}{2} + \sin^2 \frac{x}{2}\cos^2 \frac{y}{2}$
Rearrange
$ \displaystyle\cos^2 \frac{y}{2} -\sin^2 \frac{y}{2} + \cos^2 \frac{x}{2} -\sin^2 \frac{x}{2} + \sin^2 \frac{x}{2}\cos^2 \frac{y}{2}- \sin^2 \frac{x}{2}\cos^2 \frac{y}{2} + \cos^2 \frac{x}{2}\sin^2 \frac{y}{2} - \cos^2 \frac{x}{2}\sin^2 \frac{y}{2} $
Simplify
$ \displaystyle \cos^2 \frac{y}{2} -\sin^2 \frac{y}{2} + \cos^2 \frac{x}{2} -\sin^2 \frac{x}{2} $
$ \displaystyle \cos(2u) = \cos^2 u - sin ^ 2 u$
Now let $u = \frac{y}{2}$ Hence: $2u = y$
Thus: $ \displaystyle\cos y = \cos^2 \frac{y}{2} - sin ^ 2 \frac{y}{2}$ Similarly apply for $ \displaystyle x$
Finally
$ \displaystyle= \cos x + \cos y$