This is correct.
However, you can't convert Ava Jones to a walk-on and still give her a scholarship. She was recruited to Iowa to play basketball, so she can't get a scholarship of any sort and still be a walk-on. (At the very least, she can't get a scholarship that is not available to the general student body, but I'm a little fuzzy on the rules.) However, she could, as
@BoxsterCy says, take a medical retirement, be a student assistant or something, and the school can give her whatever money they want -- but she probably wouldn't be able to rejoin the roster (although, again, a little fuzzy on the rules).