That is the correct way
If there are items that you do not want to install after the reset:
Do the master reset
wait and watch for the customizing screen that usually appears after you align the screen.
When that appears, quickly do a reset by poking the stylus into the reset hole.
If there are apps that are still present in remove programs that you do not want, look in the XDA-devs link for a clean or lite ROM and follow the instructions on how to re-flash your ROM
My current favorite is the Naked, Big Storage rom from:
[Updated 07-Aug-2008] CRCs Release 12.9 Development Thread - Build 20270 - xda-developers