Surgeon, your method works for playing single player. But once you connected to one of the regular servers, you'll get some missing textures and maybe sounds.
The reason is that the q3 demo's version of pak0.pk3 is not the same as in regular q3. And a "pure" server, which most are, will not allow you to load a file that is not on the server. You can connect, but you won't get the files that are in the demo pak0.pk3.
But go ahead, if you don't mind some missing textures. I seem to remember it's actually quite playable for most of the maps. But wq_nightfort is unplayable in this way, because the skybox is missing. It screws up the graphics for the whole map.

What our current standalone testing version does, is basically just allowing the client to load a custom replacement for the vanilla pak0.pk3.