What you are suggesting will work as long as the rails are insulated as Matt said. However, I just checked the ESU Loksound website. I specifically looked the Loksound Select, which is designed for O scale, and yes it will work in conventional DC but you will only get engine sounds. You will not be able to blow the horn or bell or any of the function buttons. ESU recommends using their decoders under DCC.
Unfortunately, larger DCC systems are kind of expensive but you might be able to use your ZW-L to power it. If you are only going to run one locomotive you can probably get away with a cheaper HO DCC System.
