The application will still have to connect to your server, but it will not download the assets anymore.
At the moment the cached content will stay on the device, except if the operating system needs more space. Then the space is automatically freed.
So you cannot assume that it will stay on the device, once it has been downloaded.
As a general alternative, you could use the new metaio SDK + AREL and create an offline application. Please have a look at
http://dev.metaio.com