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Graphics aren't bad.

Character models look a bit odd (some jaggies and poor texturing.)

Scenery and background look nice, some good lighting and shadow effects.

I'm glad they kept a similar appearance to the first game. However, it's interesting to note, that much like Halo 3, (Microsoft's other big franchise) they haven't tried to push the graphics too far beyond that of it's predecessor. Perhaps they were told to focus more on the gameplay, and to keep things simple.

If I ever get a 360, this will be on my wish list.