Yes, that works well.
This one is a myth. I do own and use SetCPU but not to try and save battery.
SetCPU can give your phone a nice, snappy feeling when slightly overclocked.
However, clocking down to, say, 32, is not very useful.
Consider a task that would take a certain amount of time to complete at 998 MHz.
When you slow the CPU down the same task will, inevitably, take longer to complete since your CPU is now running at a (much) slower speed. Comparing 998 to 32 suggests that the CPU is running roughly 31 times slower, hence, it will take longer (31 times?) to complete the very same task.
Savings in battery life? Someplace between very little and none.
From ny_limited
EDIT: Whoa I swear your username used to be ny_limited, did you change it to NYLimited?