I don't have a definitive answer but from my reading of the spec I think it means as you mention that the Directory entity bean will be deleted followed by associated Movie entity beans.
If an entity is deleted, and the cascade-delete deployment descriptor element is specified for a
related entity bean, then the removal is cascaded to cause the removal of the related entity object or
You have to remember that they are two steps performed by the container when deleting an entity bean i.e. Entity Bean relationship is removed followed by the persistent representation. The container maintains the relationships, so you have to think of it a little different then if you where writing the SQL to remove data directly.
One other thing though � it could be a container implementation on the sequences of data been removed !!! In any case the spec have outlined the outcome from calling entity bean or its accessor method after a cascade-delete.
I hope this helps ��