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Rhodes claims to be able to build Native apps but I'm not sure or not if this means a native shell + embedded Web Browser like PhoneGap or does it create a true Native app like (I believe) Titanium does.

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Did you watch the webinar? – Yannis Aug 30 '12 at 13:00

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It embeds a web browser like PhoneGap.

There are advantages and disadvantages to each. The embedded web browser approach is likely to minimise effort for you but there may be functionality limitations such as camera or accelerometer access, and it may be slow, as the Facebook apps developed in this way are.

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