It didn't work out quite like that, largely because I'm cheap. First, I discovered that rear racks can get expensive ($45+), add bags ($65+) and you've got some major investment going into schlepping your stuff on your bike.
First, I went to amazon.com and figured I'd purchase a bag and rack system for nearly $90. My problem was the shipping time: up to 5 days for delivery, and the price (and later... the small size):
Because I bike commute to work, I needed something sooner and something comparable in price. So, next I stopped by the REI here in town and picked out this number for $95:
The Topeak Dynapack DX. Pricey, sleek, and... too damn small. I brought this bad boy home, loaded stuff up and discovered its fatal flaws: too small, and only holds 10 lbs. And I saw this system in action on another bike and the side swinging problem was too much. So, I scrapped this plan and settled for:
The Sunlite rear rack. Holds upto 40 lbs. and only cost $24 at The Broken Spoke Bike Shop in Santa Fe, NM. And for a bag I resorted to my old and trusty timbuk2 messenger bag. I know... you're asking, "How do you mount that bag to the rear rack?" Answer: with two of these ($3 each from REI):
The result (total cost $30):
I'm happy I saved money and I'm happy I get to use what I already have. I hate unneeded consumerism- especially when you already have what you need to get the job done!