Correct - from a side view, the stock X3 is like a sandwich:
screen protector film -> smoked/tinted screen cover -> OLED digital screen
With the clear screen cover mod, it becomes like this sandwich:
clear Nintendo screen cover -> OLED digital screen
No screen protector is necessary, as the clear cover used IS scratch resistant - it's the clear screen used on a Nintendo DS. If you know anything about the DS, it comes with a little plastic pen that you draw and move across the screen to play games (some games you go berzerk on the screen with the pen, going back and forth quickly to fight a boss or do some other action in a game). So the plastic Nintendo used is polycarbonate (the same thing used in racing car windshields and eyeglasses due to it's strength and scratch resistance).
Note I said scratch resistance, not scratch proof - it's not like it's gorilla glass or anything. If you rub it on pavement or sandpaper or with car keys, it would scratch the clear Nintendo plastic cover. But polycarbonate is a far cry from the super soft plastic xduoo used on the stock smoked/tinted screen cover (which is why they pre-applied a screen protector LOL).
Also, be aware that you can polish ANY plastic, including the stock smoked/tinted cover or the clear Nintendo cover. All you need is a bottle of plastic polish and a soft cloth or old tshirt. You can get plastic polish liquid at any auto parts store or order it on Amazon etc for a few dollars. It's made for polishing plastic such as headlight lenses and plastic watch crystals and whatnot. You only need a single drop to polish the X3 screen (the least amount possible).
Now, that's not to say that you couldn't ALSO use a screen protector on top of my clear screen mod. You can certainly do that. If you go to any dollar store (or ebay, etc) you can buy sheets of peel and stick screen protection film for cell phones and tablets. You would just cut it to fit and apply it on top of the clear screen mod. If you choose to do that, you end up with this sandwich from a side view:
screen protector film -> clear Nintendo screen cover -> OLED digital screen
Make sense?
As far as how effective it is, yes you can easily see the screen in direct sunlight with the clear Nintendo screen cover. You can't see it at all with the stock smoked/tinted screen cover.
Here's a photo showing the difference (stock smoked/tinted cover is on the left, clear cover is on the right at the same brightness level):
It's hard to tell from the "full brightness" photo of the clear cover (ie bottom left photo), but it's ridiculously bright. So bright that the camera does some magic so it doesn't blow out the photo. It's so bright that I don't even keep the brightness on full. I keep it about 75% of the max, and I can still see it outside just fine (indoors I can turn it down to 10% brightness with the clear screen cover and see it perfectly fine). With the stock smoked/tinted cover, I couldn't see it outside even on 100% full brightness! So it's a huge difference.