Correct. "Gas" (some amount of Eth set aside for fees) covers the cost of running the contract, so you're free to run a non halting program - the EVM will happily accept however much gas you set aside and continue chugging along.

This isn't the first time PoS has been used to secure a coin, either. (With the number of altcoins out there that's not even surprising). Eth shifting to it would just represent the first major coin to use it.