This seems to work more like Asus' Padfone, so when the phone is docked, you get ICS on the larger screen, and get to use all Android apps.
http://www.omgubuntu.co.uk/2012/02/ubuntu-for-android-announ...
The fact that they run in a special window suggests that the applications actually run in Android, but that they are composited in/on the Linux desktop.