Thoughts on a quick run through the demo:
Consists of 1 race (Panzer Dragoon level) and 1 Skill challenge (Golden Axe level). One racer only in the demo (Sonic) for both events.
It appears to be muddier looking and less colorful than the first game, also appears to be running at a lower res. The framerate is good and consistent though. It plays really well, but I bet some people will dislike how slow the game gets once you're on water or in the air. Shouldnt the air portions be at least as fast as when you're driving? That seems weird to me. It controls fine, but the on water/lava portions aren't up to Hydro Thunder's high standard. It also doesnt feel like my vehicle is in the lava/water. It feels like it's floating over it instead of being immersed in it...if that makes any sense.
My major complaints - the weapon selection sucks compared to the first game. And more importantly the announcer from the first game appears to be gone. I hear he makes an appearance elsewhere, but I really miss him during the race.
Good demo, though, and it sold me on the game. I think I'm leaning towards the 360 version now.