Just to be fair, did you notice the resolution of that shot? Yep, 1024x576. I suppose it was accurate afterall.
The additional blur simply has to be due to anti-aliasing. There's no way this game doesn't use some form of AA (at least selective). On my display, the game is quite blurry, but has a very clean appearance. Most edges seem very smooth (even the foliage isn't bad). I don't think the textures have necessarily been cut down from that above shot either, it's simply a matter of distance.
The game is such a visual mixed bag. There are aspects of it that look pretty nice (the HDR lighting is actually really nice), but at the same time, plenty of ugly bits as well.
In all honesty, I DO feel that this blurry look would have worked better for something like Halo 3 than the selected display mode.
I mean...
This has a soft almost "CG-like" appearance...
...but Halo 3 is just jaggy as hell...