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Visually, the demo is everything that it should be, considering the quality seen in the announcement teaser from E3 2006. While the game is technically in pre-Alpha with presumably a year left in development, the single-player footage looks incredible, so much so that it might make some people say "Gears of Huh?"
I keep hearing a lot of worries, especially with the visuals in Gears of War, that the graphics in Halo 3 won't be able to deliever. To those that feel this way you might want to rest easy after reading this article from the EGM 3 weeks of Halo.