Correct, except for your example. Firstly, 120 watt USB c cables don’t exist, only 60w, 100w, 140w and 240w. And only plugging in a 100w or higher cable into a 60w extension would be dangerous, since it would allow drawing 5 amps on a cable over an extension only designed for 3 amps. However, as soon as your extension is rated for 100w it is completely safe to use with any USB c cable, even those rated for 240w, as those only operate at a higher voltage but still only allow 5 amps max.

I have also never seen an USB C extension cable rated for less than 100w, so this is kind of a moot point. If 60w usb c extensions exist somewhere, they would indeed be dangerous, but I have never come across one