Can anybody confirm or deny this??
Depends on the title. A few like Half-Life 2 run very poorly. Several seem to run fine, but you'll notice the occasional thing that doesn't work quite right like with Halo 2. Majority run fine.
Hopefully MS releases a new update soon adding in some more popular titles like RalliSport Challenge 2, and polishes up current titles that have issues.
They all run with improvements, similar to how the PS2 runs PSOne titles. Every original X-Box game will be upscaled to 720p
and 1080i and taking advantage of X-Box 360’s anti-aliasing capabilities.
However, the emulators aren't perfect. Take Half-Life 2 for example, which is one of the worst offenders in the list. Frame rate stuttering is bad (Whereas it remained consistent for 99% of the game on the original Xbox). People have reported bugs in several critical areas in the game while running it under emulation that cause you to fall through the ground, etc.
Many, if not all of them, have errors of some sort. Most will remain perfectly playable however. I believe the Ninja Gaiden titles have crippling errors in them as well.