I'm sure many of you have been witness to this debate being exaserbated by the 360 fanboys. The groundings of this debate is complete and utter nonsense and let me explain why.
This idea started out when Aaron Greenberg, the director of product management for the 360, openly stated in a destructorid interview (http://www.destructoid.com/aaron-greenberg-on-npd-modern-warfare-2-and-halo-reach-157596.phtml) that Halo Reach will be the biggert game of 2010. While that statement is probably true, this excited 360 fanboys to the point where rumors started to turn up about the game, one of which being that it would boast a new graphics engine.
The source of this rumor stems from the imfamous leaked image of gameplay that was posted on the internet.
This is an image of Halo 3 in-game
To me, it looks to be the same graphics engine with some minor upgrades (notably to the textures and resolution) but it is nowhere near the quailty of a game such as Uncharted 2 or Killzone 2 (or crysis for that matter).
For reference:
At the VGA's, the new Halo Reach Trailer was released to the happiness of the 360 owners everywhere.
http://www.youtube.com/watch?v=hnbrN0PsYko
Bungie stated after the video's release that the video was meant to be their graphical bar they wanted to achieve.
http://www.bungie.net/News/content.aspx?type=news&cid=24158
Now thats all good but if you examine the differences between the leaked screenshot and the trailer, you'll notice that there is a significant difference in terms of graphical prowess. This reminds of the E305 Killzone 2 trailer that sparked such huge controversy as it was stated that that was what the game would look like. It took Gurrilla Games 4 years from that video to actually make the game look that good. Given that Halo Reach is going to be released in Fall and hasn't been in development as long as other games in the series, I have doubts that they can actually achieve that goal. They also stated on their site that the footage was all in-game and they used a frame drop technique for the video. That is basically taking very-low framerate video and combining to look 60fps. That means that there is a serious need to optimize the engine to make the game run smoothly with that kind of quality of video. Also noted is the extra AA used in the video which Bungie says won't be there when the game is released.
Even if the video from the VGA is an exact replica of what the game will look like, it doesn't even come close to the kind of quality seen in games today such as Uncharted 2 or Killzone 2
http://www.gametrailers.com/video/train-gameplay-uncharted-2/57341
As of now, the argumentfor Halo Reach being graphics king is really out of the question (a big fat No). Whether Bungie can make the game look as good as it did in the trailer is up for speculation. Maybe the beta might finally answer that question but we will see in time.
this is Halo reach pre alpha.this is Halo ODST
look at the objtives, go to place here...... yeah nothing, its no where near done.
heres another nice pic.and btw its not the same graphics engine watch Halo reach's reveal in the e3 2009. they state its a new engine. and you are judgin by the worst of alpha pics. wait till the game is done, in september thats 9 months from now. Not only that but these pics were taken back before september, since bungie stated that they finished Map layout around that time and are starting to add textures. 
Crysis with texture pack and some tweaks. 
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