I like your analysis, even if it is simplified as you quite rightly state. It explains why next-gen graphics will look only marginally better than prev-gen - the increase in frame rate and resolution will eat away a lot of the PS4/XB1's extra power.
There are some notable exceptions though. With hardware support for things like tessellation, improved shaders and other effects incorporated into the next-gen GPU's, you can get additional improvements for some things without requiring additional power. So there will be "free" benefits like improved lighting and more realistic surfaces. Whether this is going to provide the "WOW!" factor like Directx 9.0c shaders did for last-gen is going to be interesting to see (my guess is it will only be notable for graphics geeks, not so much for the average gamer).
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