I have seen O-4's transition to the reserves when they were passed for DH and thus had no hope of making active duty O-5....
But declining promotion to O-5? That is a few years later and is a big roll of the dice, especially if they are not promoted to O-5 in the reserves.
The rest of your scenario of getting promoted all the way to O-6 hinges on a lot of factors, including the ever present timing and luck. It may work out but may not, a big gamble to be sure.