Repairing permissions can be done that way but it is not the best way.
Not only is it not the best way, it's not usually a good way at all if you're not running the same OS and patch level as the boot disc. Otherwise the actual OS contents and the disc's permissions database won't jive and there's no point in repairing permissions.
If you can't even boot into safe mode, I highly doubt it's a permissions issue. The next things I would try are:
1) I agree with Dianne that the next step should be booting from CD and attempting to repair disk.
2) I'd also try booting into single user mode and attempting a filesystem check (fsck)
http://support.apple.com/kb/TS1417
