Oh, don't remind me of those early 3D games... except for the racing games, most of them were awful and we all would have benefited from waiting a bit more to make the jump. I mean, look at Final Fantasy VII and IX, both on the same gen but one was boxy and ugly as fuck while the other was simply beautiful.
Yeah, those early 3D games were quite ugly - but then again, they were jump from wireframe and flat shaded vector graphics of 80s, so I was quite excited for them.
As someone who played lot of Minecraft, even voxel resolution in that video is more than enough if the game is to have full world governed by such physics...and of course interesting gameplay. My guesstimate is that we'll be seeing quite a few experiments in next gen based on voxels, since not only ways to manipulate them are becoming easier, but memory managment and accessing massive voxel data bases will be much easier due to both consoles having some sort of fast SSDs.
I think it's about time for volumetric future to finally come.