How do I go about re-installing Windows 7 using an .ISO on a USB?

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I lost my Windows 7 HP disc, but I still have my key and I've downloaded an .ISO of Windows 7 that I found online. How do I go about re-installing?

Is it as simple as this: format USB, put .ISO on USB, restart and boot from USB, follow installation instructions?
 
I just open the ISO to view files (with a tool such as Virtual CloneDrive), then extract the files contained in the ISO onto the USB and your done :)
 
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