1. Thank you so much for reading the guides before coming here and asking questions. Seriously. You wouldn't believe how many people around here neglect to do this.
2. Yeah, that's the process. Though to clarify, your first export doesn't have to be uncompressed, it just has to be lossless. Therefore, codecs such as HuffYUV and Lagarith will also work (but no XviD/DivX/MPEG-anything).