100% true. This flag in GOD container tells console that this is installed game, and require DVD retail disk check during startup. It's the only difference. All retail HDD games (XBL Marketplace/Installed/Ripped through ISO2GOD) are in GOD container format. ISO2GOD ripped gamed doesn't have valid sign, so they cannot be used on retail consoles. Installed games have flag to check retail disks, but on RGH consoles this check is disabled - i think it's patched to always return true

. It's also a good thing, that installing games from disc while in RGH won't break any sign, so it still can be used on retail console with retail disc.
While I was writing this, I realized one thing. Installing games on HDD makes those games "valid" on retail consoles, so It must be signed in some way, to allow hypervisior to run this code. It can't be on-the-fly signed with master key, because installation works offline and nothing is send/received from M$ servers, so it has to be signed with console key (to make it at least visible as uncorrupted in HDD file browser) just like save games or profiles.
And my thought is : can't it be signed externally with our key and with this retail disk check flag disabled?
Probably it's not that simple and M$ wasn't that stupid to allow self signing with console keys

Maybe installed game uses master sign from DVD disc to verify if it's valid, or maybe discs contains valid master sign for GOD container?
Anyone have this kind of knowledge?