That method will work for the most part, but there is a newer method that most players seem to prefer.
At release, Patch 1.5 had a serious bug that caused crashing when used with most mods. If you don't use mods then this shouldn't be a problem. If you do use mods, the mod community came up with a workaround that made 1.5 the preferred version for most players.
The workaround is a program called FO3Edit. You can download it from here:
FO3Edit at Fallout 3 Nexus - Fallout 3 mods and community
Rename the .exe file to FO3MasterUpdate.exe to put it into master update mode, then just run it. It will automatically convert all your mods to master files, which will solve the crashing problem. Re-run FO3MasterUpdate any time you install a new mod.