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Only other thing is slight tearing occasionally.

If you're observing tearing, it's not getting 60fps. Most likely, it's not all that close, since they'd use vertical synchronization if they could maintain 60fps. Most of the time I notice tearing on a 60hz display (your TV), it occurs most obviously up between 35-40fps.

It sounds like they're having a bit of trouble keeping the frame rate up. That's very bad for a racer, as 60fps is critical.

And there was talk of this game being native 720p but upscaled to 1080p. Well in replays it's definately 1080p. But in game there is some noticeable jaggies which doesnt appear in other true native 1080p games

The PS3 does not have a scaler, so it cannot scale 720p to 1080p.  Sony's solution is to use very rough pixel ratios -- that is, you render the frame at 960x1080, then double each pixel by width to become 1920x1080.  That's not rendering the game in 1920x1080, mind you, that's doing a very poor man's scaling of 960x1080.