Merging Sites using 301 Redirect

Will PR really be transferred?

[rover]

We need to merge one of our smaller sites into a new and larger one. The smaller site has been doing well in the search engine rankings, but in the long-term we really feel that it will be necessary to incorporate it into our larger site to keep our structure and indentity coherent.

I have read somewhere that if you use a 301 redirect that the PR will transfer from the original site, and that even if other sites linking to the old site don't change their links, that as long as the 301 is in place the PR will continue to transfer to the new site.

Is that correct, or did I miss something? The sites are both our own server, so it isn't a problem to renew the original domain, and to keep the 301 in place indefinitely (or at least until there are a respectable number of back links to the larger site, and we can convince some of the sites linking to the old one to update their links).

I would guess that the larger site might get sandboxed, but we're really looking more to the longer-term future with this.

Does anyone have any experience or input about this? Thanks in advance.