I saw Phoenix during a presentation of MS Research in Germany about 3 months ago. They showed cross compiling from a PC to Xbox 2.
According to the presentation that day Phoenix covers the whole code generation process (including debugging). The input as well as the output is not bound to any language and/or target at first hand. So they said that for example the input could be a binary executable, it would be - how to call that ?? - 'de-linked', new code added in front of functions or calls and the re-linked again to build a patched version.
All in all it sounds quite cute to me