Kind of odd that a PS3 fanboy posts this question...
At any rate, I'll give a dignified answer: Absolutely not. The 360 still has a ways to go on optimization, just like the Wii, just like the PS3.
Escpecially with Multi-Core Processing, developers have just started (even 3 years into it), begun to tap into what MCP can do - PS3 or X360. It's a new field, and I truely doubt that many middleware solutions, nor developers, have been able to come to terms with developing the strongest possbile title, using the closed development environment.
For Gears of War 2, the graphical comparisons to 1 aren't as awe-inspiring, because Gears 1 was the first true "generational leap" game, that really showed off what next-gen was about, graphically. However, Gears 2 is using the same engine, and I bet that they aren't optimizing for that much more horsepower.
Look at Fable 2, Fallout 3, and some of the upcoming 08 games - maybe it's just me, but alot of them look awesome, and better than 1-2 year old comparibles. Lost Odyssey looks better than Enchanted Arms, Condemned 2 looks better than Condemned 1, ect.
Are developers close to reaching the max potential of the X360? Maybe. But I think that there's some room for developers "getting more" out of the 360, but MUCH more room for developers striving for better coding which will allow for better performance.
And I'll leave you with this: what kind of improvement was there from Devil May Cry 2 to God of War 2? Thats the kind of improvement, graphically, we can still expect.
Back from the dead, I'm afraid.
