Yes, I think that definition of cheese is correct. I have always interpreted the use of "cheese" in a game context to be a reference to a technique, skill, or item which is over-powered to the point where it removes the challenge from playing the game.
Of course there are many flavors of game cheese. "Holy cheese" is when divine intervention is used to keep a stumbling story plot moving along. "Stale cheese" is when a series of encounters are all resolved in the same basic way. "Moldy cheese" is when you have way too many potent magic items gathering moss in your inventory, to the point where you have forgotten they are even there. "Cheese Wiz" is when you encounter a wizard/etc. who has hit points and powers far beyond that of a player character wizard/etc. of the same level. There are probably some others I can't think of at the moment.
