That will work. In general, I’ve found that removing the plaster isn’t the issue. I’ve even used the back of a claw hammer to get the general size of the hole. The plaster is usually held together with horse hair for its reinforcement, so it can hold up to some beating. It’s the lathe that is the issue. The plaster is held on by the amount that falls in between and behind the lathe, basically holding itself in place. If you shake that lathe, it will vibrate off the entire horizontal row of plaster. So, after you expose the lathe, be very careful to make sure it’s either supported at your cut, or you take your time with something like the oscillating multi tool. If it starts to vibrate, back off and see if you can drive a screw in somewhere to hold it right.
As for finishing, you can keep some of the lathe you cut out, or from a different area of demo, and put it back in, provided that you have a stud nearby. We usually use durabond compound to fill in the rest, as it’s hard like the plaster. If you put a big piece of drywall in there as your finish, it will show as it doesn’t have the same texture or feel.
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