You cannot compare Reach to Killzone 2.
Despite what people here may think, KZ2 was "saved" by it's art direction. The textures are very low res and blurry, the game is monochrome, the environments aren't very expansive for the most part, they even talked about enclosing areas as the only way to get all the memory for textures and lighting to work. What made it work and look great was the art direction they did, which took maximum advantage of the characteristics of the engine, being heavily stylized.
Halo: Reach, on the other hand, from the leaked details of the article, seems to be "Battlefield: Halo". This is something the KZ2 engine or the old H3 engine cannot possibly do because it means huge maps with huge battles, lots of players, AI, and vehicles at once. It also doesn't look as distinct (even though the Halo style is very recognizable) because it's not as stylized as KZ2.
Different engines, different philosophies, for difference purposes. An engine isn't made to do everything, even Unreal Engine games are heavily modified depending on it's purpose. The KZ2 engine can't do what Reach / Battlefield do, and vice versa.