"the thing is with gears of wars and graw 2. it always looked great. even in early pictures etc."
True enough about Gears -- it actually got downgraded by the time it came out -- but GRAW 2 was a re-use of an old engine, so of course that looked great from the beginning. GRAW actually looked pretty crappy up until a month or two from release, when suddenly they dropped in all the high-res textures, HDR, etc. People were screaming about it like crazy, saying it was so far from the "target" trailer shown at E3, and then it all came together in literally a month or two.
The Halo blogs say everything they've shown so far doesn't have the final textures, has no dynamic lighting, no water effects, no self-shadowing, etc etc.
So, yeah, I don't think it will look as good as Gears -- it's got to support a lot of players and will have much more wide-open areas -- but I think it is going to look dramatically better than that video (and better than the beta coming up in a couple weeks).