To answer your basic question, yes that is the purpose of the Recovery media it to be able to restore it to as shipped condition, even if you have installed a new blank hard drive. Disc 1 is the bootable disc that gets the process started, the other discs contain the OS, drivers and additional programs, boot from disc 1 and away you go.
I recently did a T42 from scratch (XP though), I booted from the first disc then followed the prompts to insert the other discs, then when it was done it rebooted into the recovery partition it created, then I had to perform the actual recovery of the OS from there.
The recovery discs just re-creates all the partitions and loads the data into the recovery partition, then you have to run recovery of the OS, its a 2 step process, unlike other manufacturers.
You would have to delete the recovery partition once the OS is installed if you want the disc space.
It was rather confusing when it booted into the recovery partition after running the discs, I expected the desktop to load, scratched my head a while then decided to run recovery, and this is when the OS was installed on C:.
I am not sure but they may have changed the 2 step procedure with W7 recovery discs.
Hope this helps.