When I first saw those Vegas screens, pre-E3, I was skeptical.
After seeing what GOW and PGR3 have to offer, the 360 seems more than capable of scenes like those.
With time and effort, the majority of developers will be able to squeeze a lot more out the 360 than is currently being displayed.
In a couple years, after the development process is more streamlined, we will really start to see the next generation.