That's the gist of it, yeah.  The PC's would probably do a great variety of things (fighting, adventuring, a bit of thieving, etc.), but end up forming the country spoken of in the first post.  Of course, there can be humans sympathetic to the kitsune and vice versa.

And yes, the clans have quite a lot of infighting.  The Water and Earth clans hate the Fire clan, the Wind clan looks down on the Water and Fire clans, and they're all nervous around the Darkness clan.