I think the terms of the offer are correct. I suspect your friends have confused the ads that say "you can get a ticket on any airline," which is true within the price cap, with being able to transfer points to the airline's program. In fact, the bank buys the airline ticket for you. The airline gets sells a ticket (at a discounted contract price, which is why you usually have to go through their designated agency). Their program never enters into it.

One good side of this is that "award" tickets under this sort of program usually earn airline miles. Other than that, the amount of credit card purchases needed for an award flight may be less than the number of airline miles you'd need for the same award, so if your spending and travel fall into the right pattern (lots of credit card charges, little other mileage-earning activity, want economy advance purchase awards) a program like this can be a good idea. For most frequent flyers, who earn the bulk of their credits as flight miles on an airline's program and often want premium-cabin or upgrade awards, it's not.