yes afaik this seems to be the case
btw there is a recipe that converts cracked items to normal quality items with iLevel=1
1
Eld Rune + 1
Chipped Gem + Low Quality Weapon --> Normal Quality Weapon of same type
this can be used to get some elite weapons with guaranteed low amount of sockets from larzuk, that would not be obtainable from monster drops
Lets say, you want 3os Colossus Blade. These normally only drop in hell, so their max sockets will be set to 6. If you find a crude one and cube it following the recipe above, you will get iLvl 1 CB with max sockets of 3 that will get guaranteed 3os from larzuk.
Unfortunately, you cannot generate ethereal items through any cube recipe.