I think, it's wrong....twice.
First of all, System Restore deals with system files only, not with application files, so System Restore won't uninstall application in question. Most likely, System Restore will make the program un-usable, because during installation some files will be installed into system directory, and those will be missing after using System Restore.
However, most other files from the application in question will remain in tact.
Secondly, I've never seen any malware, which "is localized to a particular application". Unless, it was written by really lousy malware creator.
In general, System Restore, in 99% cases, won't remove an infection