Thanks for taking the time to lay all this out for n00bs. I always planned roughly according to this thought process, and it's nice to know that an established owner has confirmed the Sparky thought process.
One thing I'll add for n00bs: Don't let it get to Part 6, if possible. Always have a couple of relievers available, and don't leave it to an algorithm that none of us really understand. If you see that your bullpen is taxed (everyone in the blue or red), you will either have to (a) burn a starter with excess pitches, or (b) use another starter as a reliever. Neither one of which is good for your team in the long run.
One thing I'd like to hear from Admin is the distinction between SetupA/SetupB. I was always under the impression that SetupB comes in first if you're LOSING, and SetupA comes in for ties and when you're WINNING. For some reason, that's the way I always thought it SHOULD work.