OK, I finally got ahold of Substance for XBOX (friend rented it from work).
I did NOT expect such a major visual downgrade. The quality difference is much larger than it would seem. Everything is done in a much less impressive maner...it isn't just slowdown.
Basically, it's like this...
1) Slowdown and framerate inconsistancy is the first problem. The cutscenes actually loose their polished feel b/c the framerate is up and down constantly...AND the actual playback speed changes (you'll see the camera panning jump ahead real fast then move a little slower and such). The opening tanker scene literally runs at half-speed almost the entire time when outdoors (snake moves SLOW).
2) Textures - Ugh, what happened here? They use the same level of detail on the textures (ie - kinda blurry), however, they are horribly dithered in the XBOX version. I mean, REALLY bad in comparison. Whereas you would have a smooth color gradient on the PS2 version, the XBOX version looks like sh*tting JPEG versions of the same textures. I never expected that.
3) Particles - The rain and other similar particles look quite different. Just watch the opening. The rain looks much less like realistic rain, and more like a bunch of falling sprites.
4) Blur and DOF - HUGE loss here. The blur effect used in the PS2 version really gives the game an almost CG-ish look and really added to the cutscenes. The XBOX version of that effect is MUCH worse looking. Hard to put into words, but it really looses the look that they were going for.
We went through certain areas on XBOX and PS2 and the difference was very noticible. It just totally looses the tight and polished feel that the game had.
XBOX MGS2 has more slowdown (much more), dithered textures, no rain physics and it's quality is much reduced, dithered lighting effects (sun lens flares, the dark tunnel eye, etc. all have serious color banding) and reduced filters used on the visuals.