Resetting Keychain Password - is this the correct remedy?

That is correct. The consequence of not remembering the original Keychain's password is that you will simply have to populate the new one with entries such as login names and passwords. You only have to do that once. It's not that big a deal.

The original Keychain might as well be deleted.

This is the procedure you need to follow to reset your Login password.

OS X Lion: Reset a login password

If that does not work for whatever reason you can also use the following technique:

1. Restart your Mac while holding down the ⌘ and R keys at the same time until you see the OS X Recovery screen.
2. From the menu bar at the top, select Utilities > Terminal.
3. In the Terminal window type resetpassword and press Enter. A window will open behind Terminal that looks like this

1. Select your startup volume ("Macintosh HD" in the above screenshot), choose your user account from the dropdown selection, enter a new password, complete the password hint field, and click Save.
2. You may then see a confirmation dialog explaining how this change affects Keychain Access and what to do about it. Remember it or write it down, then click OK.
3. Quit Reset Password
4. Quit Terminal
5. Quit OS X Utilities and restart your Mac.

To fix your Keychain problems, go to your Utilities folder and open Keychain Access. Follow the steps here: Mac OS X: Keychain Access asks for keychain "login" after changing login password.