lardsoup,

You are correct in the interpretation, however, do not run the engine
at that power setting, it's about the worst possible for it.

As stated above, read John Deakin's columns in AVweb about what's going
on inside the engine. Either run it about 100 degrees rich of peak or
slightly lean of peak, although, thankfully on the little GA engines so
long as you are at 65% power or less you can't hurt them, the temps and
pressures don't get high enough.

All the best,
Rick