Mostly true. But the last part is incorrect. There are far more pixels in an image compared to the number of points in the point cloud area covered by that image. So you get 1 pixel per point. In addition there can be multiple points that map to the same pixel.
* Mathematically align the photograph and the lidar point cloud.
* For each photograph pixel, colour whichever aligned lidar point is closest to the camera.
So you end up with one coloured lidar point per photograph pixel?