That demo is hardly photrealistic. The hair shading is terrible too. Check out some good CGI on cgtalk and you'll realize how many more generations games are still behind.
The old man and that old summoner both looked very photorealistic to me, I can say Agni herself doesn't look that photorealistic though. However my point here being the engine certainly allows for that kind of photorealism quality to be delivered in realtime regardless of the art style.