I have not heard of a 'Recovery' vs 'Factory' reset. But I confess to being a bit confused. In the owners manual it says:
To reset your smartphone to factory settings and erase all the data on your smartphone, touch Menu> Settings > Privacy > Factory data reset > Reset phone.
Warning: All data on your smartphone will be deleted. (Nothing on your memory card is deleted.)
But on Motorola's site it says:
Factory Data Reset is a tool used to remove everything that was imported, added or installed on the device. Keep in mind, when using this feature everything is deleted. Nothing stored on the MicroSD or the internal phone storage will be affected unless you choose to erase it as well.
And on Verizon's site it says:
Performing a hard reset will remove ALL data including the Google account, system data, application data, application settings, and downloaded applications. Only perform this reset if absolutely necessaryand shows this image for step 6, where you erase everything:
So I have always gone on the belief that everything will be erased. But if you say not necessarily, I'm sure you're right. I've never reset my phone and somehow I'm sure you have.