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"It seems to me we are not far off where the hardware is no longer limiting games"

Wrong. PS3 and 360 are already limited. There are some games out there that can't run on their hardware because it's too weak (I won't say names). And seriously, PS3 and 360 are faaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaar below of some technology that's already present on other places. Don't think they are "next-gen" or "above next-gen", because they're not.

You don't have to worry, in years to come you'll see more and more games that will make you say "OMFG that's real time?!"