I would do it pretty much the same way as a patchwork quilt, assuming the knitting is fairly firm* - layering backing, wadding and knitted piece, using temporary spray adhesive until I'd fixed them together with stitching. As I wouldn't want to do much quilting on top of the knitted piece I would put in a few stitches at spaces that fit with the knitting pattern to hold it all together, then add the binding around the outside.
If you want to bag it (wrong sides together, stitch them together most of the way around and turn rightside out) then I would use the spray adhesive to fix the wadding to the wrong side of the backing, then stitch them together, turn out and add stitches to hold everything together as above. That sounds pretty much like your description, I think.
But we don't allow the quilt police in here, so however you want to do it is just fine. :thumbsup:
*If the knitting is floppy or very stretchy I would back it with fabric first.