That looks right to me, I'm pretty sure that's how I did it. Like I said, if you can use FireWire, it's faster then USB (a few minutes compared to possible hours). Make sure that iTunes is really empty after you reinstall windows, before transferring your library back in. If I recall, when I signed back into my iTunes (store) account on my new computer, I had to authorize it for use (was prompted to click "authorize").
Good luck!
You may want to see if any other members have any suggestions on how this worked for them on Windows 7 machines.