Hi -- your model is correct. Here's a period etching of the Merrimack with the Confederate national flag near the stern of the ship, and the jack of that flag at the bow, on the jack-staff.

So that was probably confusing. Let me expand: In naval parlance, the jack is a small flag, sometimes part of the national flag or national ensign, that is flown at the front of the ship. The national flag or ensign is flown at the rear of the ship. In the US and Britain, the naval jack is the canton of another flag -- in the US, the current fifty-star naval jack is the canton of the national flag; in Britain, the national flag is actually the jack used in their civil, state and naval ensigns. Some countries use a square version of their national flag as their naval jack, while others use coats of arms or other one-off designs.

I'm not going to trace the history of the Confederate national flag here in great detail, because i don't really care about a bunch of traitors, but in the time period when the Merrimack was launched the canton of the Confederate flag was a circle of seven white stars on a blue field. Because this caused the secessionist armies to be mistaken for Federal troops, the government in Richmond adopted two other flags over time, one white with the St. Andrew's cross in the canton, and then one with a vertical red stripe on the fly side. Because the cross was in the canton of the flag, they naturally became the Confederate naval jack.