You're making it all more complicated than necessary.
Yes, you have the process fundamentally correct. Of course, you can convert the raw files to JPEG, TIFF, or whatever file format supported by your graphics program. You can also set the JPEG compression level, or even save in lossless JPEG. Many also keep the original raw files to allow changes in editing afterwards (to start over, so to speak), but this is entirely your choice. You can save the raw files anywhere you choose. After PS and ACR are installed, you should be able to double-click on any raw file and have PS open with the file itself opening in ACR within PS.
By the way, raw is a word instead of an acronym (refering to the raw data from the camera), treated just like any other word - all lower case when discussing raw in general and first letter capitalized only when discussing a specific raw format, utility, in a title, or whatever (such as Adobe Camera Raw or your thread title). No big deal, but just a pet peeve of mine at the moment.
stewart