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They said this same stuff back when the PS2 was coming out "it'll produce pixar-quality graphics" (still waiting on that pixar experience from the ps2 LOL) so I doubt this is true. Avatar took years to complete and they went thru hell trying to render that movie. If anything maybe the cutscenes will be avatar quality but even then that will raise the development costs.

If the industry heads down this path, expect expensive games and less GAMES (in their purest form) and expect more interactive movie/cinematic game experiences. If thats ur cup of tea then its awesome news! If you would like more games that are more heavily focused on gameplay then I'm not so sure.