I've put this to the test, and it works.

For anyone out there looking for a way to transfer TRS-80 Color Computer data from diskette to the PC (or for how to get the data from the PC over to Color Computer diskettes), here's a way that works quite well. It's also an excuse to hook some retro hardware up to that old Windows 98se PC that's likely sitting in a closet somewhere. The executable is a patch for Windows 98se that fixes some issues that the O/S has with 360K 5.25" disk drives.

http://www.voltage-control.com/cocotrns.html