Helping people with computers... one answer at a time.
It certainly should work, though not exactly as you expect.
I do things a slightly different way, that happens to solve this same problem.
Like I said, I believe your approach will work. Windows Setup actually copies over all the files it needs before its first reboot. I don't believe it will ask for any more files off of the CD-ROM thereafter, (but I could be wrong). In any case, I don't believe that the wireless network will work until much later in the setup process.
My approach is a little different, though. And I actually do this for almost every Windows XP install I make, regardless of whether or not the machine has a working CD-ROM drive.
Before even running setup, I copy the entire "I386" directory tree from the CD-ROM to a new subdirectory on the hard disk of the machine I'm setting up. I usually use C:\I386. The I386 directory on the distribution CD-ROM contains all the Windows XP setup files. Now, even though that includes lots of files I don't need (like drivers for hardware I don't have, for example), the amount of space that takes up is small compared to today's hard disk capacities.
Then, after the files have been copied to my hard disk, I run setup.exe, or winnt.exe, from my hard disk's copy of the setup files in C:\I386. All the files needed are there, and setup never needs the CD-ROM again.
That last point is worth repeating: setup never needs the CD-ROM again. Not just for the setup process, but after that too. Some weeks or months later, when you add hardware to your machine, Windows may need files from the Windows Setup CD-ROM. If you've copied them to your hard drive, as I've just described, Windows will remember to get them there instead of asking you to insert the CD-ROM. That's particularly nice for laptops - if you happen to be away from home or the office at the time, and wouldn't have a Windows CD-ROM to insert.
There is one "catch" (isn't there always?) - you can't use this technique if you want to have the setup process format your hard drive. It would format and erase, all the files you so carefully copied over.
But aside from that, it's a nice way to streamline the setup process.
A final caveat: don't lose that Windows CD-ROM. Keep it somewhere safe. If your hard disk ever dies, for example, you'll need it then to reinstall Windows, one way or another, to your repaired or replaced drive.