Yeah, that's basically how its supposed to work. It's a gatekeeping method (in theory). I've never put a game up on Steam, so whether or not they actually deliver that money back is another story.

yes $1,000 must be earn (taxes and steam percantage not included), so doing some math if you relase your game at:

$0.99 you'll need to sell 1,011 but steam takes (?) so using the myth percentage (30%) you really earn $303.30, so to get $1,000 you need to sell 3,334 times ($1,000.19) for your game to get $100 back. Valve gets $2,300.47 for doing nonthing. Which means You lost more money by a company that does nothing.

This keeps going too with:

$4.99 x 201 = $1,002.99 losing (30%? myth) = $300.89

You need 3,333.99 to be sold ($1000.19). Valve gets $4,990.98.

No matter what Valve always gets more money from this by not doing anything.