I figured that converting satellite at 192 to Wav* and back to MP3, would still come out better than the DAB 128 broadcast, which converts to 96 as an MP3

Certainly taking the decoded output of a 192k MP2 stream and encoding it as a decent quality MP3 will sound better that the native 128k DAB broadcast. I don't know what you mean by "which converts to 96 as an MP3" though. You are restricted on bitrate you use on the conversion to MP3, it would be better to use a higher rate like 160k or more. Converting it to a 96k MP3 will make it sound even nastier than it already is.

As I understand it, the digital output of the Sky+ has already converted the signal to a Wav

Not actually Wav, but I know what you mean

I would be interested in your(very low-tech) opinion, as to whether what I'm doing is going to work.

It should work, assuming you have a digital input on the sound card on your PC. However it isn't going to be as convenient as the combination of DabBar/WinDab and DigiGuide can be, simply because Sky don't transmit program guide data for the radio channels, meaning you have to set all the recordings automatically.

It will sound better than the DAB broadcast, assuming you use a decent bitrate on your MP3 files.