Yes, that is correct. I have done exactly as stated on wiki in the past and it has always worked (even though you rarely get to see the overseers as they usually get killed exactly at server safe for the charm points on most servers).
You must kill:
- All three overseers (they will not respawn that day)
- Every single elf in Shadowthorn (they will respawn, but they should all be killed at least once).
When you kill the bog god's followers his power will weaken and the moss covering the bars will recede.
Once the moss is gone the Wooden Bars can be broken with any weapon, so that the firstarters can be freed (the bars will reform and can be re-broken, but all that matters is that the moss goes away).
After the moss is removed from all three prisons (by killing all elves) and the firestarters are freed, the next day (after Server Save) the town of Shadowthorn will be on fire!