The understanding of how it works is good but the schematic has problems.
1. Consider what happens to the JFETs if the balance potentiometer is set to one end of it's track. Bear in mind JFETs are majority carrier devices, you bias them off to control their current.
2. The audio transformer is floating to RF. A Choke can't act as a block to RF alone, it works in the same was as a resistive divider and behaves like the 'top' high value resistor but still needs a 'bottom' resistor to be able to reduce the voltage. You should at least add two capacitors, one from each end of the transformer secondary to ground.
In principle, any circuit that has two signal paths and a combiner, and the signals are inverted will cancel them out and unbalancing them with modulation signal will result in DSB. I still wonder why you want DSB though, as a method of transmission it has no real advantage over AM and it takes up twice the bandwidth of SSB.
Brian.