An interesting postulate, although the author forgets that there is a BIG difference in quality between the pre-rendered cut-scenes, and the in-game engine. One day, we'll have pre-rendered quality in the game engine, and THAT will be the last 1%.
The screwiest part of this phenomenon is that game designers pride themselves on the quality of their sepulchral human characters. It's part of the malaise that currently affects game design, in which too many designers assume that crisper 3-D graphics will make a game better. That may be true when it comes to scenery, explosions, or fog. But with human faces and bodies, we're harder to fool. Neuroscientists argue that our brains have evolved specific mechanisms for face recognition, because being able to recognize something "wrong" in someone else's face has long been crucial to survival. If that's true, then game designers may never be able to capture that last 1 percent of realism. The more they plug away at it—the more high-resolution their human characters become—the deeper they'll trudge into the Uncanny Valley.
Scott Hanselman is a former professor, former Chief Architect in finance, now speaker, consultant, father, diabetic, and Microsoft employee. I am a failed stand-up comic, a cornrower, and a book author.
Disclaimer: The opinions expressed herein are my own personal opinions and do not represent my employer's view in any way.