I don’t capture at runtime because it’s just too expensive to be worthwhile, but yes that is essentially how I built my setup. It just blends between a day/night cubemap generated from a cube capture component based on the TOD.
Another thing you can do which helps with inside-looking-out scenarios is masking out the sky when generating your cubemap (or 2d texture if you don’t want to use a cubemap), because you can sample the sky color from within the material to handle TOD transitions. The SkyAtmosphere system is awesome, everything you need is exposed to the material editor.