Custom Post Type vs Taxonomies Guidance?

[TyyWard]

Ok, I have spent the last couple days reading all I can on custom post types and taxonomies and think I am starting to get a little better idea on what they are and how they are used. The one area that I am not 100% sure on and can't find much on it is the best method for setting up a directory using these. So here is my question:

My directory will be a business directory serving 4 different areas/regions. I am thinking that I need to create a directory custom post type and then under that create taxonomies for "Locations" and then the rest of my categories with a parent category and then sub-categories. So it would look something like this:

Directory - Custom Post Type

Locations - Taxonomy (Main Category)
Area 1, Area 2, Area 3 and Area 4 - Taxonomy (Sub-categories)

Outdoor Living - Taxonomy (Main Category)
Camping, Outdoor Cooking, Outdoor Sports, etc... - Taxonomy (Sub-categories)

Restaurants - Taxonomy (Main Category)
Mexican, American, Chinese, BBQ, etc... - Taxonomy (Sub-categories)

etc, etc, etc...

We will have 7 to 8 main categories for our directory with 15 to 20 subcategories under each. Is this the best way to go about setting this up for a directory? I have been reading this article (http://thinkvitamin.com/code/create-...tom-post-type/) and it seems to follow the same idea.

I need to make sure we can separate out each area as on our homepage we have it so visitors can search via area. I just want to make sure I am thinking the structure through correctly before I get too involved. Thanks for any guidance you can give!

Tyy