You proof is correct however you could simplify your life by considering $|x|<1$.
$|x|<1\implies |x|^2<|x|\implies |x|^3<|x|^2$
Thus $|x^3+x^2|<|x|^3+|x|^2<2|x|\to 0$ when $x\to 0$
This is why taking $\delta=\min(1,\varepsilon)$ is helping.
Another reason you were expecting $\delta<1$ is that it is often used in epsilon-delta proofs.
We often consider $\delta=\min(1,\varepsilon)$
You generally end up with $|f(x)-\ell|<K\varepsilon$ where $K$ is a constant, which is sufficient to conclude.
( i.e. you can take $\delta'=\frac 1K\delta$ and get $|f(x)-\ell|<\varepsilon$, but this step is not absolutely required ).
Here is such an example: https://math.stackexchange.com/a/2486840/399263
In the present case, we could do instead $\quad x^3+x^2=x^2(1+x)$
Thus taking $\delta=\min(1,\sqrt{\varepsilon/2})\implies |x^3+x^2|<\varepsilon$
As you can see there are many ways of dealing with the limit at hand.
However simple inequalities like $|x|<1\implies |a_nx^n+\cdots+a_1x|<|x|\sum|a_i|$ are often ignored althought simplifying considerably the calculations.
Always consider simplifying an expression with raw inequalities before going for details about epsilon-delta proofs.