You are correct, but you don't need the 3.5 output, and Jimmy is correct, just use the Composite (RCA cables, red,white and yellow) from the converter to her RCA (Composite) cables, which go under the house.
I guess we need to clarify. I think he is trying to hook up one HD receiver to two TVs. He has a HDMI cable run from the HD receiver to the TV right by it. He has a composite video and audio cable running to the second TV, under the house to the other room. The other TV is giving him the annoying pop up about switching resolutions and he is trying to get rid of that.
That can be solved using the component to composite converter he has linked to here.
He would hook up a short component video/analog audio cable between the HD receiver, and this converter's inputs. He would then hook up the composite video cable, and the analog RCA cables to the ouputs of this converter box. He would need something like this to split the 3.5mm stereo outputs back out into left and right RCA jacks.
I just looked at my setup, and that is the way I have it. Sorry, I forgot.