Your understanding is correct. Responding to something does not make you a Contributing user, only Participating. You need to do something like start a discussion, ask a question, or post a document to be a Contributor.
It bears repeating the conceptual framework behind this: increasing levels of personal risk. The more you are take a personal risk, the more engaged you are in the community.
Just watching -- Active, low risk
Putting my name on something (e.g. Like, Comment, Response) -- Participating, medium risk
Adding a net new idea/topic -- Contributing, highest risk (you are putting yourself out there)
Of course, it does sometimes happen that a user puts something really substantial in a response/comment. But even this never happens unless someone is willing to start the discussion in the first place so we reserve Contributing status for people who do that.
>>PS - this plug in rocks!
Thanks!! Glad to hear it is adding value.