The above is exactly how it works, although it does get it's knickers in a twist sometimes.
If you set up your highest priority source first (DVB-S in your case) it'll put that at the top of the Source Priority list and use that first, then it that tuner's in use, it will use the next one down (DVB-T#1 in your case), and then try DVB-T#2 if DVB-S and DVB-T#1 are both in use.
Sometimes it seems to "favour" a particular tuner, though, so even though you've told it DVB-S is the #1 tuner, if for some reason it's started to use #2 then it seems to carry on using #2 for a while.
If you're watching on the DVB-S tuner and it has to turn over to record something for which there are no more free tuners, it will pop up the conflict screen and ask you what other thing you want to stop recording. Occasionally, though, it will turn over without asking first! I think there is a flaw in the logic somewhere that gets "exploited" - it's the same logic that messes up the back to back recordings (if you have two shows set to record back-to-back, it ends one early in order to start the other EVEN if there are spare tuners available).
If you want to change the priority order of the sources, or remove a source (say you have a weak freeview signal on one transponder, for example) for a particular channel you can do.