Intel showed off a realtime ray-traced demo of Quake Wars on a Larrabee prototype a few months ago.
http://en.wikipedia.org/wiki/Quake_Wars:_Ray_Traced
From the wiki:
Improvements through using ray tracing
Force field shader
* Shadows: Besides the usual hard shadows that are easily generated by using a ray tracer this project also highlighted the benefits of getting plausible shadows through partial transparent objects. This has first been shown on a force field shader that changes transparency and color over time. The intensity of the shadows changes accordingly [3]. Another example of this is a windmill model with blue sails that project colored shadows[4]. As of 2009 no commercially released game has shown different intensity colored shadows from partial transparent objects.
Ray traced water
* Water: Accurate, per pixel exact reflections and refractions have been shown on a dynamic water surface with wave simulation surrounding an island. In a traditional rasterizer these effects are only possible in a less accurate manner through generating separate reflection textures and usually some distortion algorithm that simulates a refraction-like behavior.
Total reflection seen under the water
* Under water: Through simulating correct reflections and refractions the player is able to see the total internal reflection effect if he is under the water surface and looks up to the sky. As of 2009 no commercially released game has shown this special effect.
Reflecting scope of sniper rifle
* Gameplay enhancing: The lens of the game's sniper rifle has been changed to show physical correct reflections of the environment behind the player. To achieve this in a traditional rasterized renderer another view would have been needed to be rendered, stored in a texture and projected back onto the lens. Enabling this effect in the ray tracer had only a 1% performance impact on the frame rate[5].
Dome made out of glass
* Glass: To demonstrate the properties of a ray traced glass shader a dome has been shown consisting of a glass surface that correctly reflects the surrounding environment including all dynamic objects.
* Collision detection: Besides handling the graphical tasks the ray tracer has also been used to calculate collision detection[6].
Camera portals in camera portals
* Portals: Multiple recursion of camera portals has been shown. This effect is already known from other games like Portal with a default recursion depth of 10. In comparison to that the ray traced implementation has been achieved through only one line of ray tracing shading language code and shows a recursion depth of up to 250[7].
* Massive dynamics: To prove that highly dynamic scenes can also be handled in a ray tracer, 500 player objects have been added to the scene and animated[8][9].
