In E. M. Forster's Howards End, what exactly is meant by the epigraph 'Only connect...'?
You can find plenty of examples to justify your reading. It certainly applies to the character of Henry Wilcox, who could be a better person if he listened to the passions that he has inside rather than focussing only to materialist and economic concerns.
I would also interpret the epigraph as an invitation to connect with all types of people, regardless of social class and social conventions. The story of the artistic and idealist Schlegels siblings and the Wilcoxes, a capitalist British family, points out the hypocrisy of social conventions. Forster does not achieve this critique through direct attacks and ridicule. He rather opts for a psychological novel, where he makes a firm appeal for the necessity to bridge social differences to avoid tragedy. The death of Leonard Bast and the consequent imprisonment of Charles Wilcox are results of sharp social divisions. On the contrary, the marriage between Margaret and Henry, their reconciliation after Bast's death and Helen's decision to raise her son (whose father is Bast) at Howard's End (which he will inherit after Margaret's death) show that different parts of British society can learn to coexist. This reading complements your own. In fact, the Wilcoxes can stand for outer life and for material everyday life, while the Schlegels represent inner life and a more idealist dimension to our existences.
As well as the need for connection between selfishness and sympathy (Wilcox's and Schlegel's) and the between social classes "Only Connect" also refers to a need for individual psychological reconciliation.
"Only connect, and the beast and the monk, robbed of the isolation that is life to either, will die." (Chapter 22, Howards End)
Forster seems to be urging that we must reconcile our sexual passions (the beast) with our rationality (the monk) to reach a higher, happier form of existence.