PIC Assembler Bit Wise Operator | Inclusive OR
Yes, you seem to understand correctly how MPASM processes numeric expressions.

While using the bit names is way better than the hard coded HEX values most people use, I think there is yet a better way.  The problem with the bit names is that they can be cryptic, and you are relying on the name only to explain what each bit does.  This method also doesn't work well with multi-bit fields, as you demonstrate with the b'111' at the end.  I had to look in the datasheet to find that these are the prescaler divider selection bits.

I like to show each field on a separate line so that each gets its own end of line comment.  Here is a example of setting the OPTION register in some 12F508 code from 2009:


         movlw   b'01000010' ;set OPTION register
                 ; 0-------  wake-up on change enabled
                 ; -1------  weak pullups disabled on GP0,GP1,GP3
                 ; --0-----  timer 0 clocked from instruction clock
                 ; ---0----  timer 0 inc on rising edge of T0CKI (not used)
                 ; ----0---  prescaler assigned to timer 0
                 ; -----010  prescaler = 1:8
         option


I use this method for most SFR settings.