I agree that regardless of how it ends up looking - even if it's as good as the demo - whatever about gameplay quality, some will be picking at it and comparing it unfavourably to the original demo. There are those who are already prepared to argue its inferiority, I think..it'll be an auto-response.
One thing to remember is that Sony included this as a demo of what they think will be possible on PS3. That doesn't mean it's what they expect all games to look like, obviously, so I'm not sure re. pressure for devs, those except Guerrilla anyway. It's as likely as not that that's what they think marks the high end for PS3 games, something that's ultimately possible.
As for expecting Killzone level graphics, I wouldn't expect it, but ultimately I'd like to keep an open mind about it. I think it might be possible, I don't want to underestimate what the best devs can do with that kind of hardware (looking at what Capcom did on GC, Konami did on PS2 etc.) Some of the first gen stuff is looking very impressive (Heavenly Sword for example), so who knows a couple of gens down the line..