Yes, the core fighter separates! This is the Casval (Char Aznable) version of the original Gundam. There's also a version with the traditional red, white, blue and yellow colors, and a G3 Gundam version with a mostly gray paint job. The Casval version is cheaper because it only comes with the figure, core fighter, shield, beam sabers, bazooka, beam rifle, and extra hands, while the other versions come with all that plus an extra shield, extra bazooka, and G-Fighter which can combine into tank, g-sky, etc. modes.
It looks REALLY nice, they had it on display last weeked in Akihabara. It basically looks like a 1/100 scale model that's already been assembled and pre-painted.