I found this to be a very interesting read.
Even though it seems like the OP thinks KZ2 has a better look overall (I could be wrong), I still do not see how this is a fair comparison. Isn't this a comparison between a demo and a finished product?
Judging from what many said in the KZ2 thread as well as the KZ2 demo thread, on the main menu of the demo the game reads "2008 Sony Computer Entertainment Europe", actually if you look at a Dec 2008 to Jan. 2009 comparison you can pretty much figure out for yourself this is dated code. So there is a good chance the comparison is a dated one from Dec 2008, before GG added the extra bells and whistles to give the game a much better appearance.
What I find impressive though is as the OP said, you sit someone in front of both games and odds are they will say KZ2 looks better. This is exactly what happened last night when me and my Sisters Boyfriend played KZ2 and Gears 2, he thought KZ2 looked much better.
@Garnett
How often do you play a game and spend your time zooming in and looking at textures on a wall? I certainly do not.
You can sit here and say Gears 2 has better textures, but graphics account for MUCH more than just textures. Gears 2 does not have anywhere near the amount of stuff going on around you, the animation is not on the same level, the physics as well. You need to take this all into account. Both may look comparable with images on the forums, but in game it is clearly obvious KZ2 has it beat.
My opinion by the way. 
iPhone = Great gaming device. Don't agree? Who cares, because you're wrong.
Currently playing:
Final Fantasy VI (iOS), Final Fantasy: Record Keeper (iOS) & Dragon Quest V (iOS)

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