Yah. Basically. And you should tell the owners before they join so they know what they're getting into.
If you want to do a snake draft, then you need to work out keeper rules. Generally, people say that the draft pick that you give up has to be more valuable than where you drafted the player you're keeping. So if you're keeping someone you drafted in the 6th round, you'd have to give up your 5th round draft pick to do so. My recommendation would be:
1st year kept: Round player was drafted - 1 round (so a 10th rounder costs you a 9th round pick)
2nd year kept: Round of the year before - 3 rounds (so a 9th round pick becomes a 6nd rounder)
3rd year kept: Round of the year before - 5 rounds (so a 6th rounder becomes a 1st rounder)
4th+ year kept: Same rule as 3rd year kept
And if a round goes to zero or negative, you just can't do it. So you can't keep any 1st round draft choices the next year.
And if you were trying to keep 2 guys from the same round... say you were trying to keep the guy you drafted in the 8th round in 2006 and another guy you drafted in the 5th round in 2007, you would be trying to keep two guys from the 4th round (the 1st guy cost you a 7th round draft pick in 2007, and then 3 more in 2008, so 4th round... the 2nd guy you would take one round off his place last year, so also in the 4th round) then you'd have to give up the picks in that round *plus* the one in the round before it. So since you can't give up two 4th round picks, you have to give up a 4th and a 3rd.
As far as how you do it, it just depends upon what service you use. I'm not sure how Yahoo handles keepers; in Sportsline you can handle it all pre-draft by assigning them to teams and taking away the draft picks. If nothing else, you can just make sure that they're undrafted by everyone except the team that keeps them in the right spot.
0-3 to 4-3. Worst choke in the history of baseball. Enough said.