spacemissing's suggestions sound like they will work, but if I understand what you're asking, I think your original idea would work as well. But I don't think you need $80 equipment to do it either. Here is an HDMI extender that uses ethernet cables (Cat5 or 6) for less than $20 (not including the cost of the cabling, of course - and note it is HDCP v 1.2a compatible):
http://www.amazon.com/HDMI-Extender-over-Cat5e-Cables/dp/B003LZA95W
This is one example - search [hdmi extender] to find others.
Not sure exactly what you mean by "...same at the other end with a VGA Extension" but if you mean connecting to more than one device you would want some kind of powered splitter.
My concern here is that there is much misunderstanding about what HDCP (High-bandwidth Digital Content Protection is what it actually stands for - no "Definition" word involved) is and how it works. Your converter WILL work if it is HDCP compliant. Also, HDCP does not originate in HDMI, it is merely implemented in HDMI (and DVI, DisplayPort and other digital schemes) if it is encoded in the content - and not all digital content is HDCP encoded. But even if the content you are trying to transmit over HDMI is encoded, as long as you are using gear (devices and cabling) either HDCP Compliant or HDCP "pass-through" it won't shut down the signal. See here for a better understanding of HDCP:
http://tv.about.com/od/hdtv/a/HDCPoverview.htm and here are technical details for more than you wanted to know:
http://www.digital-cp.com/files/documents/04A897FD-FEF1-0EEE-CDBB649127F79525/HDCP_deciphered_070808.pdf
This may seem off topic but I want to try to stop the spreading fear of the HDCP boogeyman. It is a concern but it can be vanquished. If it's a problem some online searches will turn up an answer.
Here, for example, is an HDMI to VGA (with audio) converter that IS HDCP v 1.2 compliant:
http://www.digital-cp.com/files/documents/04A897FD-FEF1-0EEE-CDBB649127F79525/HDCP_deciphered_070808.pdf
The one you have may be also - just find the words "HDCP Compliant" or "HDCP pass-through" in the product description/specs and you'll be OK. Good luck!