I meant it could look much better than it does at the moment (not better than arcade games).
And yeah the actual scan looks better than last year's E3. We haven't seen high definition images of the game yet. But still I can tell from the mountain in one of the scans that it's still under the graphical level they could reach for (they seem to underestimate the amount of triangles the consoles can push).
There was a nice interview the other with some Japanese guy (forgot who he was, talked about Blue Dragon, Lost Odyssey, etc) and whom basically said that Japanese developers are falling behind because over there there is very little information sharing across the industry (they don't have their own real Siggraph for example). Here we you can see games in development at IGDA meetings where they even show the kind of tech they are working on. Plus there is more migration of staff between companies compared to Japan, and even in the companies themselves people often get the chance to get involved in different aspects of production rather than sit at the same desk for years doing exactly the same work for games that don't evolve much anyway iteration after iteration.
Japanese companies have to change the mentality. The ICO team is a good example of a team doing things right and it shows in their games. Right after SotC was released they published an article on how they achieved various effects in the game, such as HDR, motion blur, self-shadows, and deformable collisions.
