You seem to have the right idea. It is generally done by pitch shifting and cross fading between multiple engine loops (where an 'engine loop' is a looping sample of the engine in a particular state, ie. you'd likely have an idle loop, a low-mid rpm loop and a max rpm loop). The engine's rpm drives the pitch shifting through and cross fading between loops. The more good engine loops that you have, the better your engine will sound.

If you're especially motivated, other sounds such as supercharger/transmission whine, turbocharger spooling, road surface noise, etc. can be layered on top as well, though likely you'll drive them not using engine rpm, but something else.