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Yes. There's two way to point to Cydia's server. One is manually edit your host file while the other is using Tinyumbrella to do it. The advantage of using Tinyumbrella are you can tell which SHSH blobs you have saved, one click to point to Cydia's servers and ability to kick phone out of recovery mode if phone gets stuck during restoring.
 
So following those steps I can restore to the OS saved on Cydia via iTunes? No need to download anything else other than the firmware files?
 
So following those steps I can restore to the OS saved on Cydia via iTunes? No need to download anything else other than the firmware files?

Yes. If Cydia has SHSH blobs for the firmware you want to restore to.
 
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