Yes, it is downgraded. I planned to always get this on console regardless, so the downgrade isn't a surprise on my end since hey, I knew the original footage was not possible even on the PS4.
Maybe it's my mindset, but pretty much all initial footage I see of a game that looks completely unbelievable... I mark as target render footage. Basically, they may be doing all that stuff in engine, but what we're seeing is their ideal target, not what they are actually going to end up producing. When you start viewing it always as that, this stuff is less disappointing.
CDPR stating rather boldly it isn't downgraded is a separate issue entirely.That's lying. Either, it was a lie when they showed the initial footage as the actual game at that time didn't look like that, so it wasn't actually downgraded because the game never looked that good, or they lied in saying it wasn't downgraded literally, when it actually was. Neither are good.
Keep in mind, I feel the game still looks really good, at least what I gather from the ultra settings via YouTube. But there are certainly moments that make me realize it's not the same thing. To me, it's obvious in the tree branches blowing in the wind. The leaves at least felt like if I saw them in the initial footage, they would move indepedent. Instead, the leaves and the branches move together in huge bunches, which isn't how it works in the real world.
The game still looks good, and prior witcher games tell me this is going to be a can't miss WRPG experience. But... yeah. To me, I have no issues with downgrades. My issue is that publishers/developers seem reluctant to just own up to it. We get it, initial reveals are for hype. Just like CGI trailers. Just be more honest about it.