Sure, they're not linked (that is more the theme with something like BTCRelay).

What we are working on is a port of the Ethereum Virtual Machine (EVM) to Counterparty. This means that one can take an ethereum smart contract (e.g. written in solidity) and run it "on Counterparty, on Bitcoin". There is no link to the Ethereum blockchain.

Counterparty works via a mechanism called embedded consensus, where we embed our protocol data within regular Bitcoin transactions, and maintain our own embedded ledger within Bitcoin's. Executions of Ethereum smart contracts would modify the state of this ledger.