>Am I correct with the understanding that:
>1. One simply applies it to each of the pads
>2. It is tacky, so the SM Part will "stick" to it.

As others have said, this is essentially correct.

>3. You can "touch" each pin with the soldering iron
>(or with Hot Air if you have the tool).

If you do this, you will probably end up with what is known as "tombstoning"
where the component stands up on end like a tombstone. Most common problem
with resistors and ceramic capacitors, but could happen to some degree to
other small components.

>4. Get next part....
>5. Go to 1.

It may be better to make a "toaster oven" to do a complete PCB in. Then you
repeatedly do steps 1 & 2 until all components are loaded, then put the
board in the oven. The paste is then melted using the heaters and all
components get soldered at once. This greatly reduces the problem with
tombstoning and also many hassles when doing fine pitch parts. However doing
a double sided PCB could be a problem, as parts on the bottom side may fall
off ;)

See the Seattle Robotics web page at
http://www.seattlerobotics.org/encoder/200006/oven_art.htm for an example of
how this can be done. The current issue of the European electronics magazine
Elector has a project for modifying a toaster oven with an AVR to control
the temperature profile. Small toaster ovens can be found very cheap on eBay
(I got one for 1 GBP here in the UK, and a mate who lived nearby picked it
up for me). They can be known as "toaster oven" or "mini oven" when
searching for them.

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