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Do you have any source that they're actually recompiling everything?

For example running original Xbox games on Xbox 360 also required a download of a binary which was an emulation / compatibility wrapper around the binary on the DVD that shimmed out and hotpatched code so the games worked properly.

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The download sizes reported by other commenters seem to suggest a bit more than simple shims.

The download sizes do suggest you're downloading a whole game, or at least most of one. This does not, however, imply that the game is ported -- just that they pull the game from the server rather than the disc. This makes sense even if they're emulating, because most Xbox 360 games will have received a lot of updates compared to what's on the disc, and Microsoft have probably only tested the emulation against one specific version.

its also certainly possible that part of the emulation requirements include xbox 360 patch levels, an emulated file system for updates and everything else to be together in a single container.

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