I didn't even read the OP.
Now that I have that out of the way......I think it's like movie special effects. We were amazed by many techniques film makers used to trick us into believing that what we saw on screen was really happening. Then, somewhere areound the early 90's, it just reached a bit of a wall. CGI made everything possible. Yeah, you can look back at a film like T2 and the CGI will jump out like a sore thumb but it's still impressive. There were still minor improvements but no "WOW!" Moments like when the first Star Wars movies came out. No huge impact.
With graphics in gaming, I think we've hit a similar wall, Good thing about gaming, though--we still have a long way to go as far as storytelling, immersion, interface, and such are concerned. We haven't seen the best, yet. You know what I mean- naked video game sex that's really hot instead of awkward.
