It was always going to look that "ugly", in fact even the original trailer was unimpressive unless you are one of those young, ignorant and illusionned fan...

But Wii U games are not made to be beautiful, they can't unless they stretch it to the maximum in a style where graphics don't matter that much (like Mario Kart, Wonderful 101 or Zelda), they're made to have immersive, beautifully designed game with great gameplay.

User was moderated for this post - Conegamer

"Massive downgrade" is a big exaggeration and the the handpick footages in the OP doesn't do the game justice. There were other characters in the trailer that looked better modeled.
They were showing Xenoblade on Treehouse@E3 a few minutes, the game still looks good. Technically speaking, it never looked that great or special from the start, but the vastness of the environment and size of monsters is really what makes this game shine and those still look the same as before.

The part where showed the cars driving by in the city looked a generation behind gtav

I disliked the X trailer in the E3 direct, but the gameplay demonstration looked really good. Every WiiU owner should keep an eye on this one.

Just watched the gameplay demo and I believe you are mistaken. It looks better than ever before.

The reveal looked better. I made a thread awhile ago saying that Nintendo fans need to calm down with the hype of X being a graphical showcase because when the game finally releases, that's really not what they're going to get. Then it comes out and yeah. Not what it originally looked like. Still looks great for a Wii U game though.

That game really looks like an early to mid PS360 game... Not too hot. And I noticed from the treehouse gameplay that tghe draw distances wasn't all that great all the time either... Wii U last gen confirmed! d00000m!!!

Yeah, graphically this game is below many PS3 games I have played (unless Youtube videos absolutely do it no justice)

That doesn't look bad. Just the face and the hair. The hair always looked like that though. 

The textures are bad and they're trying to hide with cartoonish cell-shading effects.

and the faces,is this Zone of the enders cutscenes?