Yes, that is correct. I put my songs in Vegas, then used the Generated Video effects in Vegas to create generic waves of color. I also learned VERY early on with LSP that if you're using a mixture of RGB and static elements, you better use primary colors or purple will turn on both red and blue lights at the same time. Yellow will turn on blue and green, etc. I also found that there is an absolutely hideous browish yellow that you can get that was just horrific when blown up to the entire house. Once I saw that color, I knew I had to generate new elements.
Here are some tricks I used:
1.) For ripples of color, use a Blue / blue for a color combination. Use a BRIGHT BLUE for the foreground and a DARK blue for the background. Perhaps 0, 0, 255 for foreground and 0, 0, 70 for the background. That will keep things from "blinking" on and off so much.
2.) Use transparent instead of black for the background. This lets you blend videos together in a unique way. If nothing is under a transparent layer, the result will be a black output.
3.) Use the same photo you use for the Light Show Pro sequencer in Vegas. This will give you an approximation of how those effects will look when applied to the stage.
4.) Simple is better - There are many points where the rendered video makes more sense than the show because my video files had too much going on. With fewer elements / "pixels", it's hard to understand what your doing on all but the most simple effects.
I'm already excited about next year, and I'm not even through this year!!