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The path I took for a similar problem was close to what Google does for gmail, drive, etc. List the first X number of users in a table (w/ pagination) and put a search field at the top that filters the table. Check boxes or clicking/tapping the users selects them and another button adds them to a group. This may be a bit heavier than what you're looking ...
Your current suggestion works, but it is a bit vintage if you don't mind me say so. Another way is to use auto-suggest and comma separated fields to assign users. It takes less space of the UI and uses search technologies instead of selecting from one to the other column.
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