At least one part was.  I'm too lazy and don't care enough to upload the slow mo'd video but if you watch the part during turn 10's demo right after the guy "gets inside the car", he looks around the car and then the cursor comes on screen in response to him moving his hand. 

Except that Natal Kinect is so advanced that it read the guy's mind and brought the cursor up before he even moved his hand.  Lol.

Somebody put the video of it up please.  Pretty funny.

EDIT:  This video comes from GreenW.  Thanks!

doubt it. They showed impressive stuff and all of it seemed to be real, live on stage. Why should Forza 3 be an exception?

Doubt it all you want but it's true.  I wouldn't post it if I wasn't sure.

That's what you thought was fake!? How about the fact there was no way for the guy to accelerate or brake with the kinect controller...

Actually, we really don't know if any of it was real. It could have all been a demo video. There were several parts where things were "predicted" or mismatched. For example, before the track and field race, the girl warming up was moving her arms around and natal was not following them, but that could be just an animated opening. The fitness girl was definitely spot on though.

Other stuff was out of sync too, like kinectimals.

it could be fake, I mean the star wars footage they showed last night was pre recorded

everything they showed last night was pre-recorded.

Actually there was a lot that I thought was fake but that's the only thing I saw that is certain proof that the demo was fake.  A lot of it could have just been lag.

They used recordings in some occasions, but then Kinect's only releasing this November. I would be surprised if the product was complete, there are (probably) many things to be ironed out in the next few months.

The Turn10 game releases in 2011, so it could indeed be prerendered or fake, or whatever you might call it.

No big deal though, SW:ToR didn't even have an ounce of gameplay to be shown, only cinematics.

The second half of the “Forza Motorsport Preview” presentation took the audience on a virtual tour of the new Ferrari 458 Italia within the expansive backdrop of the Bonneville Salt Flats in northwestern Utah. Rendered completely in real-time on the Xbox 360, the Kinect car experience allows the player to interact with the car – controller free – as if they were standing next to the vehicle in the game. With the Kinect camera tracking both full-body movement and proximity, players can literally walk up to the 458 Italia, lean into the windows for a closer look, lift the glass canopy to examine the car’s powerful V8 engine, or open the door to slide into the cockpit all with the most natural of gestures. 

“Forza Motorsport Preview” is a select peek at one aspect of the future of the Forza Motorsport franchise, both in terms of the way Kinect has empowered Turn 10 to create a revolutionary way to interact with virtual cars, as well as the breathtaking foundation of a new graphics engine capable of producing the images seen in our E3 gallery. The next full Forza Motorsport experience, which utilizes some of the ideas presented in this demo, will ship in 2011.

From where the buck stops. New engine (again) for Forza Motorsports 4 in 2011