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That's exactly how i understood it.Notice that 飾る has a different nuance between 花を飾る and 玄関を飾る. The former is closer to "to put", whereas the latter is "to decorate". Therefore 花で玄関を飾る has a nuance of "being filled with flowers", not only the ground but maybe also the walls or door. It's also same for 壁に絵を飾る vs. 絵で壁を飾る. The former is "to put a picture on a wall", but 絵 might not be singular in the latter.
Calling grammatical units properly was never my strong point.As you can see above, in the sentence 玄関に花を飾る, 玄関 is the location, not the object. 花 is not the means, either.