It's not a matter of being a fanboy of this or that. There are just things that can and cannot be done.
I would love for that to be the next PS3 graphics, but it just CAN'T BE. 3D Graphics is my life, while I'm not an expert on real time 3d graphics let me illustrate a few points that I see as an artist that technically can't be done even on next gen hardware.
-Per Pixel Displacement mapping.
Every frame is covered in it. It's the future of Real time Graphics, but it just can't be done in real time yet. There is no "cheap" processing solution.
:: Where to find it?
Look at the guns. The scope rings have smooth extruded rings running around. Also on boot treads and a host of other locations.
-Volumetric light scattering
If you look at many frames in the video there are instances where smoke trails are left across the frame. None of these are simply planes with sprites of prerendered smoke. They're 3d volumetric atmospheric effects. Many of them utilizing self shadowing and light scattering. Again. Not a real time technology.
-Area Shadows
While the Unreal 3 engine can produce a fake soft shadow. Every single frame of this movie involves area lights. Area lights are incredibly CPU intensive. There are no GPU tricks on the immediate horizon for implementation.
-Optimization
This is what most points to a pre-rendered sequence to me at least. When you're making video game content, you want to be as economical in your poly count as humanly possible. There are areas where they made no effort to conserve. A notable area would be the small bolts on the wheels. These could have be very easily, and probably unoticeably implemented as a bump or normal map. They chose to used geometry. On the tires again. They rounded each little nub on the tire. Each of those little tread nubs is using at least 50 polygons. I by a quick glance I would guess there are probably more than 200 in a scene. Do you really want to waste over 10,000 polygons on tire treads? The modeler's largest concern is the profile. What does the profile look like? The normal mapping can fill in the rest with proper lighting. But This cinematic utilizes immense quantities of geometry on the small folds on the cloth. That's geometry that could be better spent elsewhere. Each of those heads is already over 10,000 polies.
This cinematic consistantly uses meshes of pre rendered density. Pre-rendered shading, texturing and lighting techniques
The question isn't. Is this real? The question is. Which FX house did this.
Nobody is curious why they don't have a demonstration walk through or Unreal 3 style bullet time camera movie in real time? Why nobody has shown a wirefram in a PDF Whitepaper? Why we can't even just get a straight answer about: Is that cinematic running real time? Yes/No? "It's real gameplay" "It's really what the game is going to feel like." "It's really what we're working on."