Yep, that’s pretty much it. Isolate the video stream out into its own file (“demux” it), then use this new video-only file to create the ISO, while adding all the audio/subtitle tracks and chapters from the MKV back in (which is why you deselect the video track from the MKV).
I’m not guaranteeing this will work, but I do remember it being a workaround people on the 4K77/83 forums were using when tsmuxer didn’t play nice with the MKV as is.