yeah. that would be sweet. and the engine can be used for outdoor environments too.
if this is 30-40fps on a 9700 Pro imagine what can be done on the current R420/480 that has double the pixel pipes. then step upto the Xenon with its R5xx, edram and fast multi core cpus. then another step up to PS3.
It doesn't look that good to be honest. I'm sure the shaders would be fixed up for an actual game to look less like plastic but it needs more polys and the hard edged stencil shadows need to go.
Why would you put the next resident evil on a console where it will sell fewer copies and will be lowest common denominator in terms of power (I would expect) next gen? Capcom isn't Sega.