Yup, that'll work.
The idea is linked closely to how you probably think of the aperture size of your lens.
Basically, you will have a 'lens' focused at infinity. If you think of a candle for example, the flame will radiate light outwards, in much a similar way as if you dropped a stone into a river. If you Draw radii out from the centre point, to any other point on the circumference of the cicrle, then these can be considered the rays of light. If you then consider this point to be one edge of the small hole you have made in your blackout curtain, and then draw a line going to the other edge of your small hole, this will show the effect of the blurring possible. Extend the lines on further, and draw a perpendicular line, which is your screen. The distance between where those two lines meet the 'screen' is the blurring. Now, below your point which is the 'candle flame' draw another point, which could be the base of the candle. The same effect takes place here, so draw your lines going through your hole again. You will notice that they hit the screen, higher up, than the previous one. This will meant that your image will be displayed upside down.
Does that help?
