Great question, reminding people of an often-misunderstood and very important fact.
One minor letdown (hey! Other people moan about my questions, I get to moan back;-)) is the ambiguity in the described steps:
"Restore the latest differential backup, Tuesday @ 4:00 PM, with norecovery."
As other already indicated, that diff backup was not the lastest. The latest diff was Wednesday 8:00 AM. I lost (once more) a point by being too hasty - I saw the "latest differential" and without bothering to actually read the rest, I immediately concluded "heck no, that won't work; the latest diff is based on the tuesday full - the poor chap will have to revert to monday and restore a lot more log backups".
So I answered "no", then found I missed a ppoint because I understood the concept but failed to read that the latest diff backup was not actually the latest diff backup, but rather the latest diff backup that was based on monday's full.
Ah well. Still a great question. But if the description had read "Restore the differential backup from Tuesday @ 4:00 PM, with norecovery" (i.e., without the mislaeading word "latest"), it would have been a superb question.