yep all this is correct. Although you just use red, green and blue. so you can select and grade easier. yellow would be harder to isolate.What is an ID matte and what is the difference of using a surface shader with an assigned color and a lambert with color? I don't do compositing so I am assuming this ID Matte term has something to do with that since a quick google turned up a bunch of after effects hits.
I am guessing it is for selecting parts of an image by color for masking and such inside AE or similar app? And I am guessing the difference between a lambert and a "matte" is the matte is not affected by lighting.
Applying a surface shade and setting out color on a per face basis works fine for me so not sure where it's failing for you.
The top red ring is a group of faces, the blue and yellow are single faces, and the bottom red loop of faces is a red lambert attached. So I can see the reason for a colored SS verses a material like a lambert now.