When Getaway (1) was first announced they showed screens that were unbelievably real looking (for the time), and the game turned out crap and looked average. I guess in that case all the demo did was show graphics without any AI or gameplay code - when they had to add those elements the graphics had to be downscaled.
I expect the same thing will happen with all these amazing PS3 demos. Why doesn't everyone expect this to happen? We've all seen amazing, clean, detailed demos turn into much less impressive games before.
That's why I'm not buying into the Tekken footage, the Killzone demo, or this, or anything that's obviously scripted, cinematic and not shown from the gamer's viewpoint. It's probably a visualization of what they hope to produce, but which in reality is beyond the capabilities of the platform.
Could be wrong - we could be seeing this sort of thing in PS3 games, but I wouldn't believe it wholesale at this point.