Confirmed. Only star level changes since it's relative to the level you are at. Quality is absolute, and hence not changed.
As mentioned earlier, star reflects how good your player is at certain level. So generally, players with higher stars tend to perform better.
The actual ability defense, attack and strength is still arguable. Assuming 2 defenders have the same quality. Some believes that a defender with better defense ability is better while some believes a well-balanced player is better. It's very hard to justify one or another. As a result of that, stars is still more reflective than quality. However, if you have a lower stars player with a good rating through many matches, he can be better than a higher star level whose rating is always low.