Funnily enough, ever growing hardware power and better middleware increases the likelihood of this happening. Ease of development, and hardware that can handle the kind of production values we're talking about without requiring months of optimisation and fine tuning = better looking games for everyone.
Look at something like Dear Esther, Trine 2, Serious Sam 3, Renegade Ops, Magicka, and Hard Reset. Plenty of other gorgeous looking indy games.
Problem is mostly the industry surrounding these games. People still need to make money, which usually involves going through a publisher. And that causes a host of problems. So even though it's getting easier and easier to make incredible looking games on a low budget, it's getting harder to sell them.
Or, it was getting harder. Digital distribution is a huge boom to the indy community. It's the future of entertainment distribution and completely changes how the industry works. Kickstarter stuff is also promising.
The biggest problem to high quality Indie efforts is, like you said the current publisher model that really only allows huge publishers to have any real reach on the market.
Kickstarter could really be a neat model for a renewed venue of mid tier games, but it's simply not enough to sustain all of the potential products.
DD is a double edged sword, as it simultaneously gives you the option to release a product without the cost and associated risk of physical releases, but it also means that you have a very hard time to advertise your product. There isn't a proven method of promoting a DD game yet. Even the XBLA trials aren't enough yet. Social Media integration also wasn't enough to provide a real marketing avenue. And with all the barely working, poorly designed garbage that constitutes most of the DD channels baseline, consumers are very reluctant to just give a product the benefit of the doubt.
IOS tries to work against that by devaluating Apps to ridiculously low prices, but that also backfires most of the time, as barely anyone is making bank on Apps, with the exception of a few lucky ones.
When services like XBLA, PSN or the e-shop are called out for price gouging, when in fact the prices are still ridiculously low for some of the offered contents, and still are barely able to provide a healthy marketplace for smaller developers and publishers, then you know that DD has quite a way to go before it becomes the mesianic solution for smaller companies.
It's because of how shit got mishandled in Japan this generation.
To the Japanese, the casual/enthusiast divide that we talk up in the West is so paper-thin there that it almost doesn't even exist. So dividing content in such a way, either by accident or design, basically made a lot of people throw up their hands and say "fuck it, I can wait 5 years for one console that has EVERYTHING I want, until then, I've got a handheld that does that for me."
The console market isn't dead there, the combination of Nintendo's gambit and developers/publishers betting on the wrong horse caused a content divide that many in Japan simply found unacceptable for the industry. That sort of content divide didn't happen with handhelds and, as such, outsold the console market by gigantic margins.
So they are waiting for a new PS2? Understandable really. The aim of any console should allways be: Reasonably powered, widest market appeal, best average game sortiment.
The last console that can really claim this is the PS2. The Wii had the potential, but given the power difference and the rise of middleware providers, it was never able to get to that point.
As for this idiotic article, True Next Gen will be decided not by specs, but by market appeal.
PS2 was the weakest console last generation, and yet it still defined the generation in a way, the Xbox and GC could never even dream to achieve.
Same goes for Wii. The Wii was the definitory console of this generation. When both competitors try to emulate the gameplay experience of the Wii mid term through their own consoles lifecycle, you know how dominant the whole Motion Control, Non Gamers, Blue Ocean approach was to this gen.
HD is merely a small fart in a hurricane, especially when PC gaming underwent a downgrade in average Monitor resolutions when HD was introduced. Even from a marketing standpoint, HD never even came close to the behemoths that are motion controls, social gaming and Apps.