MacOS – Factory reset halfway through filevault decryption

Yes, this should work fine. I actually have essentially this config on one of my computers , the only odd thing is that my default boot (unencrypted) is OS X 10.8 (Mountain Lion), and the alternate (encrypted) partition is OS X 10.9 (Mavericks). I'm not really using it in this mode (it's a test computer that just happened to wind up with this combo), but the only unusual thing I've noticed is that when you boot from the unencrypted partition, every time you log in it asks you to unlock the encrypted partition so it can be mounted. You can either enter the password of one of the FileVault-enabled accounts from the encrypted partition, or click Cancel and go about your business.

I do not have a firmware password set on this test computer, but I wouldn't expect setting one to cause any problem. To boot from the encrypted partition, you'd have to start the computer with the Option key held down, enter the firmware password, select the alternate partition, then enter one of the FileVault-enabled account passwords. After that, it should behave normally.

Your making a test user account with a short name different than the eventual user to be migrated is sound.

In practice, you will in time over write more and more of the data, but if you have the time to first establish a file vault key and have the drive completely encrypted before copying any sensitive data, you have a more secure system and can know that the data can be sanitized cryptographically as opposed to being over-written or actually erased.

You'll want to look for these lines in the diskutil cs list output to know it's ready for the start of data migration:

|       Conversion Status:       Complete
|       High Level Queries:      Fully Secure
|       |                        Passphrase Required