Yes 100% correct.
I actually took a printout off the guide shown in E46Fanatics to Auto Accessories in Taman Megah who did my installation so he knew exactly what to do. The A/C and vents still all work - no problems there.
Also installed a PAC SWI-ALP so that the steering wheel controls on left side can control track changing, volume, muting and changing of source (from say dvd to linked up Ipod to radio).