Simple MOLAP solution
You could also try the other free open source OLAP server, PALO from Jedox (www.palo.net)
I'm not completely familiar with the implications of Step 2 in your approach above, but if you're looking for a more robust OLAP solution, it might be worth your while to check out Mondrian, the open-source OLAP / Analysis services module of Pentaho.
I dont think that Mondrian is better than SSAS but I do know that its free and you independently distribute it. It uses XMLA and its cube definition XML file is almost the same as SSAS.