That's going a bit far. This is what a character from one of the best looking N64 games looks like:

Vastly higher resolution textures and much more advanced shaders.

The models don't look like PS2 models, much less N64's. That's pushing the trolling a little far.

That being said, even if they look round enough for the console gen we're in, I do feel the character designer lacked inspiration, and the anime look and the way the team rendered it stands out as being bland and lacking personality.

Still, the game is going to be a sum of all of its parts, and so far, it looks quite good.

They don't look that different, but you're right, anyway. Not trying to downplay Xenobalde, but it's clear that Monolith puts its efforts in other deparments. 

I agree that Monolith sacrifices character detail for world detail, but I still think there's a petty significant gap between the above and this:

So how long before people start saying the character models look like they're from PS1 or SNES or Atari 2600? There's a lot of downplaying here but there has to be a limit to it.

The game looks great. I was never concerned about that. I can't really think of a Monolith Soft game that has ever let me down. I was slightly disappointed in Xenosaga Episode 2 because of the combo air/ground system for combat but that has really been about it.

and possiby 2 or 3 times more polygons

If we want to look characters, this pic illustrates it better. they are clearly steps up from ps360 3d models. it also seems like elma's hair got a nice upgrade since E3.

The nopon is also very detailed:

The character models sit around Skyrim level (perhaps a touch better,hard to say) with better textures and a different distribution of polygons (although some of the outfits result in high polygon counts like Elma's armor) and of course better shaders. That's what I've been able to determine after giving a close look at the game and examining Skyrim. Which is about what is to be expected when they are budgeting resources for better world visuals, especially the big picture with LOD and all that. You have to ignore the stylization which obscures some of the detail.

Can you say, for absolute certainty, that this is not a cutscene?