I haven't used it myself, but yes it is true that Direct CD can work with CD-R. However, this isn't the same thing as being "exactly like a CD-RW". When you format a CD-R to use with Direct CD, you allow the CD-R to be used like a large floppy disc in the same manner you are used to doing with a CD-RW disc and Direct CD. Direct CD packet writes to the CD-R, so you can drag and drop files to the drive in explorer, etc., just like with a CD-RW disc.
The difference comes into play when you "erase" a file on the disc. With a CD-RW disc Direct CD can actually physically erase the portion of the CD-RW where the file was located, freeing up that space for new data. With a CD-R disc, however, it is impossible to physically erase the data, so Direct CD writes some new metadata of its own that marks the file as having been "erased". The data is still there on the CD-R, but it is hidden from your view.
Thus, with a CD-R if you continuously add and delete files you will eventually run out of room on the disc even though you have "deleted" all the old files. They are still there taking up space even though you can't see them.
So why would you use CD-R with Direct CD if you can't actually free up space by deleting files? One reason is that CD-R media are more reliable than CD-RW media, so you are less likely to have a disc go bad and lose data. In this sense packet writing to CD-R represents a compromise between writing conventional ISO-9660 data discs on CD-R (most reliable) and packet writing to CD-RW (least reliable).
By the way, you can "erase" files on a multi-session ISO 9660 data discs in a similar manner. The data is still on the discs, but a new table of contents is written that hides the undesired files.