Hi Mahmod. You have the general idea about how to create an opening and re-frame it. If this is an interior partition there are no issues with insulation. If it’s a demising wall (a wall separating one apartment or townhouse from another doing as you describe will compromise the fire-rating of the partition. You don’t need to return the drywall into the opening. You can use an “L-bead or a “J-bead” to finish the opening. But if you’re taping skills aren’t great perhaps an unobtrusive wood trim surrounding the fireplace would work for you. And of the fireplace has a flange that covers the opening you’ve cut, you don’t need to do anymore than you’ve described. Cut opening. Frame header. Place fireplace so the flange covers the cut drywall edges.