I agree with your approach. As a junior developer I got my big break by agreeing to join as an hourly contractor while I proved myself, with the hope of being brought on full time should my performance be sufficient. Lucky for me, the company was not lying and they brought me on and the rest is history. We all have heard those horror stories about companies who claim to do the contract-to-hire thing but have no intention to make good on the promise, so this is a risky path for the candidate.