Your understanding is basically correct.
The most logical use for hyphens is to prevent ambiguity. For this reason, "high-quality" needs a hyphen when used as an adjective, as in "high-quality products". Without it, the phrase could possibly be misunderstood as "high quality-products." All examples following are from the New York Times Archives:
"¢ ... a successful and high-quality military, is something that ...
December 1, 2006
"¢ ... million feet of high-quality lumber, along with other November 30, 2006
When quality is a noun, however, no hyphen is necessary: a product of high quality.
"¢ ... markets and the high quality of the works on offer ...November 9, 2006 –
"¢ and maintaining a high quality of life for themselves and ... November 15, 2006 -
As for "high priced" as in "high-priced products," there should be a hyphen here for the same reason: to avoid ambiguity: "high-priced products." Conceivably, the phrase might otherwise be understood as "high priced-products."
The hyphen goes with "high-priced" when the phrase is followed by a noun. However, when it is not followed by a noun, there is no need for a hyphen, as there could be no misunderstanding:
"¢ ... tend to be high priced, because of the default ...April 9, 2006 -
... index has fewer high-priced houses than the market as ...December 5, 2006
I would think that "ideal cut diamonds" or "radiant cut diamonds" would be hyphenated (ideal-cut and radiant -cut), but the examples on Google show otherwise. It would seem to me that without the hyphen, both "ideal" and "radiant" could be modifying "cut diamond," but apparently this is not the case. The phrases "ideal cut" and "radiant cut" must be fixed in the diamond industry, so perhaps that is why they appear without the hyphen.
The same logic goes for "man-made": "It's a man-made island," or "The island is man made."
Something interesting about "man made," though. The American Heritage* has the entry both ways – with a hyphen and without one. The word is entered as an adjective only. Then, in Wordnet, "manmade" also appears as one word without a hyphen.
The important rule about hyphens is that they should be used to avoid ambiguity. In some cases, a phrase may appear with or without a hyphen, often without a hyphen if the phrase is fixed, as in "stock market capitalization."
Another characteristic of the hyphen is that it is used more in British English than it is in American English.
Another characteristic of the hyphen is that it has disappeared from some words and will continue to disappear as the two parts of the hyphenated structure merge in people's minds. "Today" used to be "to-day," not so long ago.
It seems that we've written a lot on just one use of the hyphen. Lynne Truss in "Eats, Shoots &Leaves"** devoted an entire amusing chapter to the hyphen.
*The American Heritage Dictionary of the English Language, Fourth Edition. Houghton Mifflin Company. 2004
**Eats, Shoots & Leaves, by Lynne Truss.. Gotham Books. 2003