Yes, it is true up to a point.
If you combine FrontPage 2003 with Windows SharePoint Services or SharePoint Team Services, you don't need the extensions installed.
Having said that, there are a ocuple of things to keep in mind.
1. Finding a host that actually offers these features is something of a difficulty at the moment, compared to the widespread availibility of FrontPage server extensions. I'm not saying that nobody is offering these options, but it isn't very widely available yet, although that will change in pretty short order.
2. Some of the most useful FrontPage features that rely on working server extensions being installed do not work under SharePoint Services.
Most notably (in my opinion) are the lack of support for Database Results and Save Results to Database which Sharepoint Team Services does support but Sharepoint Services does not.
So what you gain on the one hand, you lose on the other.
click here for an overview of what you can and cannot do with the various FrontPage 2003 options.
It's a bit of a two edged sword at the moment, but it does alolow for a varierty of possible configurations and not everyone uses the server extension features, although I always think it's worth its weight in gold purely for the form handler if nothing else.
It all falls down to what you intend to do and how you intend to do it.
Hope this helps.