Yep that is exactly how its done.
A lot of people have done this successfully for a great number of consoles including the Original Xbox.
Get a board like the PS360+ or the MC Cthulhu and a RJ45 connector.
Most people get a NEUTRIK RJ45 FEED-THROUGH
Although some people prefer the SWITCHCRAFT RJ45 CONNECTORwhich mounts easier in wood that the Neutrik
Next time head to the following thread
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You find links to just about every guide SRK ever churned out ever
You will find the following
Those would explain everything you need to know about the mod you are trying to do.