I think, in general, your theory is probably right. I like the idea that he is resetting a doomsday device.
Now lets not forget this one fact...at the beginning of Ep1, it was the "countdown alarm" that had woken Desmond up. What is the time frame between when he wakes up and when the alarm goes off again when he was talking to Locke? Think about it...it's probably no more than hour or so. How could he alone keep having to reset countdown every hour? And quite frankly, I don't think the countdown would have such a short duration...a day, or even just 12 hours would be more realistic.
And don't forget this...when he hit the execute buttom after he woke up, he did so in response to an unhappy icon | I don't think he typed in the numbers. Once thought here is that the computer also serves as his morning alarm clock...hence the unhappy face.
At face value, this Ep filled in the gaps in the storyline given to us in Ep1. However, I see Ep2 as all about the little details...the things discussed earlier in this tread...the logo, the swan, the password, the candybar, etc. The writers of this show full well know the level to which each scene is dissected, and I think this Ep was written to give the viewer the chance to do some serious speculation and interpretation.