I believe that is what a tech demo means, a real-time demonstration of the hardware capabilities. What is weird though is that while the PS2 has gotten very close (thinking MGS3, GOW type graphical quality), I still have not seen anything that looks as good as that FF8 tech demo (It was a re-creation of the ballroom scene between Squall and Rinoa that looked just like the FMV, only without the artifact ridden MPEG1 crappyness) on the PS2.
Even weirder, while the FF7 tech demo for PS3 nearly brought tears to my eyes, it didn't look THAT great (certainly not nearly as good as the rest of the "pre-rendered" PS3 games like Killzone 2). I dunno what is up with Squeenix lately, so I'll just shut up and wait for FF7: Advent Children and pray in the mean time for a true game sequal for FF7 does indeed come out for PS3
EDIT: I wrote the above while I waited the 10 minutes for my damn 56k connection to load the OPs link. I retract my above statements. I was going off memory of what the FF8 tech demo looked like in EGM from back in '99. Looking at those pics, I would say it was right on par with the best parts of FFX and FFX-2. I would also like to detract the FF7 PS3 statement. Looking at those pics more closely (I only saw a low rez trailer of it during e3 week), I can see tons of detail, which makes me want to fly to japan and force the Squeenix developers at gunpoint to stop all production on lame ass projects like Dragon Warrior XXMMIIIC and get cracking on a FF7 sequal for PS3 launch :cry:
Ok, I'm going to sleep now :FUNNY: