I've been playing the demo for more than 2 hours now and while it's definitely better in ways, I can't agree that it's on another level. I would like to play both final games to accurately compare but while impressive, I'm not creaming my pants as much as some here.
Thankfully they improved the draw distance of the shadows where it's not even noticeable, huge plus there. The lighting is amazing, especially in HDR. Headlights casts shadows, tail/headlights have a very natural glow to them, and the environmental lighting is very well done. Material shader work is top notch, both in and outside the cars. The way the environmental lights, whether it's spotlights or sun, bounces off the cars is especially impressive. Foliage also looks better than the pictures I've seen of Forza. One thing GT always outdoes other racers is the replay cameras, they look amazing. The overall IQ is very solid and clean.
Still some things stick out to me. While clean, there is still some visible aliasing, especially in the cockpit view. Sub-pixel shimmering shows on some fences and other thin objects. Shadows look great for the most part but some artifacts can still be seen. Shadow flicker is also visible in some conditions. While foliage looks better than the pictures I've seen of Forza, it can still look poor in some lighting conditions. Track side detail looks great but some lower resolution textures can be found here and there.
Overall it's a much more consistent package than earlier builds. Looks amazing no doubt. However both this and the Forza demo are far too different for me to accurately compare. From what I have played of both though, to say that either is on another level is a bit much IMO.