In a way this is a "simulated game engine", trained from actual game engine data. But I would argue a working simulated game engine becomes a game engine of its own, as it is then able to "propell the game" as you say. The way it achieves this becomes irrelevant, in one case the content was crafted by humans, in the other case it mimics existing game content, the player really doesn't care!
> An engine would also work offroad.
Here you could imagine that such a "generative game engine" could also go offroad, extrapolating what would happen if you go to unseen places. I'd even say extrapolation capabilities of such a model could be better than a traditional game engine, as it can make things up as it goes, while if you accidentally cross a wall in a typical game engine the screen goes blank.