Steve, yes you can use your input device, but I think it`s a mono device no?
Might be nicer to have a stereo mix.
Audacity is fine, I use that myself along with Wavelab for stereo recording and editing.
The size of the venue will usually dictate what endes up in the mix, larger or open air venues suit this best.
I`m not suggesting it will be a useless mix, just pointing out that a loud guitar onstage means relatively less in the mix. Ditto bass.
Vocals, acoustic instruments and often keyboards,having no onstage amplification generally end up quite loud along with fx, which are hard to hear in the venue, but much clearer on the recording.
I`ve had some great mixes from simple desk chuck ups so it`s well worth doing, if only for a recording of the actual performance.
As to the use of ambient mics for audience reaction,that starts getting a little more complicated in that the FOH engineer won`t want a couple of condenser mics in the FOH mix, while pointed to the FOH...
So he would need to do a complete submix of inputs NOT going to FOH but only to the recorder.And be careful they aren`t so loud that you lose your mix and just get the audience shouting slurping and farting.(as they do). Takes more time, makes soundguy vexed and unco-operative, unless you take him sweets and chocolate.
I often use a Digidesign Mbox mini, which gives me two inputs on 1/4 jack with input controls and a headphone for monitoring, straight into Wavelab for excellent results.
I hope I haven`t made it seem less worth doing, because I`m only pointing out the possible negatives so you can get round them and get a good recording.
MM