Yes, it is spelled correctly.
German is often very literal and spelling is quite often (especially with compound nouns) linked to the meaning of the word.
As a native speaker I understand this kind of words like a combination of what you use a thing for (or what it does, or what you do to / with it) and what kind of it is itself. This - very literal - type of words is quite common and special thing to the German language.
Flugzeug (Aircraft): Flug- (derived from fliegen, to fly) -zeug (gear) = flying-gear
Druckmaschine (printing press): Druck- (derived from drucken, to print) -maschine (machine) = printing-machine
Schiebetür (sliding door): Schiebe- (from schieben, to push forward) -tür (door) = pushing-(/sliding-)door
The Scheißhaus is spelled Scheißhaus because it is literally a (okay, more or less) 'house' to have a shit in - and the reason for some germans to somewhat ironically use this word, or the also popular "Kackstuhl", to describe a toilet maybe lies in that ludicrous literal way of describing things that makes you giggle.
Remember: These metaphors are colloquial, sloppy, and bad taste. So maybe don't use them.
The the metaphors are brilliant though. Even five years later.