The graphics, textures and fixed mesh is one thing. Post processing and lighting/shadows in real time and emotive AI that acts naturally (or even at all) outside of scripts are the real taxing bits of a game, sound also draws quite a lot, especially in games with so much going on.
The animations, synching, particle effects, tracers and lighting in the E3 2005 trailer of KZ2 is beyond this generation of hardware (even top end PC's can't do that in-game just yet).
When this eventually happens, it'll be a PC title, that much I'm sure of, and it'll be a few years yet.
Like the OP says; the graphics are uncannily close to the target render, but the target remains a render at that, with many additions and details the PS3 (or 360) hardware has no chance of putting forth.
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