That's a pretty ambitious trip for a first time traveller! Which is a good thing.
I remember once meeting a guy on a train who flew to South America when he was 17, after graduating high school, and absolutely fell in love with the continent. I remember him telling me, though, that his first couple of days there, he was terrified... it is a bit of a culture shock (so I hear, I've not been there yet) and your rules of social conduct, street smarts, etc will have to be altered a bit. But he said it was such a great growing experience for him.
I definitely don't think you're planning too much... the way I see it, the closer you are to planning your mega-awesome-super-dream-trip, the better chance you have of actually doing it. Also, I don't know about visas in South America, but it may be a bit difficult to be working at hostels if you don't have a working visa. I mean yes, you can work under the table (or work for room and board), but I don't think you should count on funding your trip that way. You could also try organizations like helpx (www.helpx.net) or wwoof (www.wwoof.org), and couchsurfing is a great way to find cheap places to stay (www.couchsurfing.com).
Like everyone else said, bring a daypack, definitely. Whether it be a small bag you stuff into your big one, or your bag may have a detachable daypack, its definitely useful, so you don't have to lug around your entire bag all the time.
Anyway, good luck! That sounds like an awesome trip. :D