Rhumb lad
No, the Equator strangely enough is in fact a Great Circle. One of the reasons being is that is does not `concave` to the nearer pole - like rhumb lines do. As the most lear-ned chaps and chapessess have said - if you put an elestic band round a large orange around the middle, with the pip bit at the top . . . now, if you move the elastic band up to say . . half way up the orange towards the top . . and it stays on . . then, then the track the elastic band is forming over the surface of the orange is now, is now, concave to the nearer pole - the North Pole of the orange.
In other words your EASTerly track will follow the curve of the Earth - you will always be heading EAST but you will not be TRACKING to your EASTerly DESTINATION you will be following the curvature of the Earth.
So, Inertial Navigation Systems can calculate a DIRECT GREAT CIRCLE TRACK - = A STRAIGHT LINE to the destination WITHOUT GOING AROUND THE CURVATURE OF THE EARTH. In other words it cuts the corner or in this case the bend.
So, say you are in Western Europe France, Paris say and you want to go to Eastern China. If you go due East South East you may eventually arrive there but it would take a long time and a lot of fuel.
So, you may wish to head North East from Paris ! Yep, North East and go East over the North Siberian coast all the way round through Mogolia or wherever your "DIRECT" Great Circle Track Takes you to your destination.
So, your initial heading is North East! and your subsequesnt headings will be East and South East respectively.
There are formulae for working all this out, which you will get on your ATPL course and the INS/IRS systems do it all using accellerometers and different types of gyro systems and flux things and well it gets very involved but enough to say it maintains the Heading of the aircraft to co-incide with the Track required instead of basing the heading (as you correctly said) on Magnetic North.
Just to completely freak you out - it does in fact calculate from Mag North in order to ascertain which way it is pointing, how far it is from the Pole as a waypoint etc., if only to inform the pilot, so it does "have a reference" to Mag North but will or will not use it to calc this TRACK - as it will effectively just look at the destination co-ordinates and draw a stright line to it (Great Circle Track) and maintain THAT line to Destination.
Hope that helps.