milk, yes that's basically correct
imo the advantage of this workflow as opposed to modeling the low poly mesh by hand from the beginning is that once the particle library has been built, which is somewhat time consuming, the library objects can be reused countless times and the particle painting is very fast. also we don't have to worry about the poly count of that stage, or the edgeflow, or the particle objects overlapping.
after a high density mesh has then been shrink wrapped over the particles, they can be discarded, although the original library objects are likely to be kept to be used on another model. and the new mesh will need some cleaning up by hand after its been decimated down to the desired poly count.
I guess it's an alternative to high poly sculpting, but for me being slightly more technical then artistic its a lot easier to produce desired results. and a less powerful computer is needed as the most processor intensive stage is the decimating, which can take several minutes, but surprisingly the shrink wrapping is almost instant and because the high poly mesh doesn't need editing by hand, blender seems to be able to cope with it quite well.