The trailer using the "in-game engine" is almost a meaningless comment.
(a) It could have been rendered with the in-game engine, but not in real-time.
(b) It could have been rendered with the in-game engine, but not with the in-game assets, and not in real-time.
Cutscenes, even when rendered in-game or in real-time, almost always use specially made scenery and animations, to allow for higher quality cinematics.
(d) Bungie is genious to have their main character not have a face. Skin shaders, facial animation, and skin/face rendering techniques are notoriously difficult to do well, and having that helmet on their main characters makes their game look hot -- relative to games that have to render faces that approximate something we are all instinctively programmed to recognize (human faces), and thus almost impossible to "fool".
I don't doubt that Reach will look better than Halo 3. Comparing this trailer to released games, however, is kinda pointless, for the above reasons. Comparing Spartan helmets to faces is particularly lame.
Seriously, why do you guys think racers, like Forza and GT, look so "real"? Its because they're rendering something that is a piece of cake to model with a computer -- shiny metallic and glass surfaces with well-defined mathematical curves. Inflexible, inorganic, in real-life, as well as on your TV. The Human face, with regards to making it look realistic via rendering? Not even in the same ballpark.
