You got the gist of it. But in Vray, there are 3 ways. You can also just turn on AO in the GI-> Advanced settings, but by default I don't think it separates it from the diffuse. (though it might these days, depending on your Vray version.) However, it works properly with transparent objects and is faster than material level overrides. I usually crank it to 10 feet and move on.
There are a couple things you also need to consider though. First, transparent objects don't collect AO. So, if you're doing a scene wide pass with ExtraTex you need to hide transparent objects, which means you're rendering the scene twice even if you're using the ExtraTex. (Still, often faster. I've found it's better to apply the Vray dirt to the color channel of a light material as the AO pass using global material override instead of ExtraTex.)
If you set the AO color on an object basis instead it may help make materials look a little more realistic because you don't have to use black. You can use dark red, medium gray, etc. Having them unique in that case is the draw. However, it certainly makes it render slower to have more nodes in all your materials. Any node can be instanced between materials, but if you're going to do that for all your materials then just use the scene wide pass.
Here's an example of a time when you might want to override it on a material level. Let's say you have to do a render of a shoe wall. Generally speaking, shoes connect to the wall through slats that sort of hook in. Depending on the size of the scene, the light may not find the details in the slats very well. A little vray dirt can make them pop out and also help the light to not bounce as much in there as the diffuse is dark with then lowers the light energy a bit. (no more glowing edges, well, sometimes.)
Last, when you comp your AO back onto your render, remember... multiply at about 35% opacity. Not 100%. If you use the GI settings AO, it's all done for you physically correct. Any other implementation is not technically correct, but still looks good.
Best Regards,
AJ