I have worked on 20+ AAA games, I am fully aware of the work involved in E3 demos
Its not at all by definition target renders. A target render is when you make a non-realtime render, and then you try to achieve that visual quality, its quite different. Sometimes that is being presented at E3 and is indeed a fake demo, but thats rarer than people on gaming forums think.
I think we're talking past each other here. I am not talking about a target renderer as in a Killzone 2 demo showing, I'm talking about polishing parts of a game prematurely for marketing and promotional purposes on a trade show.
Also, 20+ AAA games is a lot of games under your belt. Holy cow! I don't work in the games industry, but have worked a lot with software, and usually what we'd do is that we'd go out of our way to polish up a part of the app to show the client how it would feel across the spectrum.
it helps give the client a good idea of how the entire finished product could look like.
But of course it's only a tiny bit we've built, and we don't always are able to hit that level of quality across every aspect of the software, but we do try, and my experience has been that it's a motivator.
I just assumed it would be the same on many development teams.