I have been experimenting and having mixed results with the insignias. First I tried using the sticky Glad Wrap cut using a circle template and an x-acto knife. The Glad Wrap works great, but the method for cutting the circle is less than perfect, so the results are less than perfect too.
Next, I tried the wet newspaper/newsprint idea. This way I could use a compass to draw a perfect circle and then try cutting it with a scissors. Again everything went great except my cutting is not perfect, so the resulting "trial" circle is not perfect either.
Somehow I need to cut a PERFECT circle and then I think the results should be better.
Oh yesterday I went to the local craft store and found a circle cutter for $15 in the scrapbooking section. There is no way that I am going to invest that much to cut a few circles. My wife said I should, but for that price I will just use the decals!
Anyway the trials go on, but from my trials I do think you will have great success with the method / tools you described above.
Good luck and keep me posted

Leon
PS: I just used tamiya masking tape for the first time to do the two white fuselage stripes that one of my direction's paint schemes has. I am now in love with the stuff; it bent around and stuck to the curves beautifully. :-)