You are correct in your interpretation. You would begin mashing all of your grains and water at 130. You would then pull approximately half of thickest portion of the mash back out to do a decoction.
Personally, I would hold the decoction portion at normal conversion temperature for at least 30 minutes prior to ramping up to a boil. It would let the enzymes in the decoction convert the starches before denaturing.
Others might have different opinions, but that is what I would do.
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