Yep you've got it exactly. We have 2 domains - Analyst & End User with only 2 types General Knowledge and FAQs.
Just remember that you need to make the "domain" available to each group (select the group in User Management screen in Administration and then Manage Knowledge Domains appears in the actions). Not sure if this was amended in 7.5 to allow association to a role, I know in 7.4 I had to go through every group and add the domains on manually, which was a bit of a pain!!
Thanks for confirming I am heading in the right directino, much appreciated.