I'm getting lost here.
VT in Rage is
just colour, right, and those objects with normal and specular maps are conventionally textured?
No, objects that have normal and specular data need to be uniquely textured too. Think about characters, weapons, where it's more obvious why tiling and re-use wouldn't work.
So at asset creation, everything is created with unique color, normal and spec/gloss information. The source texture actually has 12 bytes of data per texel according to the VT presentation from id.
This data is still used in the game in that it's necessary to calculate the baked diffuse lighting and the baked specular highlights. But it is only included on the shipping DVD for objects that have at least some level of dynamic lighting - cars, characters, moving objects, and some of the town location environments. The rest of these maps are only present on id's server that stores the source data.
For some reason I was thinking normals would need higher resolution, but of course it's just an RGB image so can be compressed the same.
Nope, in fact it's a common console optimization to downscale normal maps (and speculars) especially if the lighting is soft and the material isn't highly reflective or shiny. Mass Effect 2 does this as far as I know, Assassin's Creed 2 even re-uses the same head geometry and UVs for every character so that they have only one spec map for everyone, and so on.
Looking forward to designing a new console with VT in mind, wouldn't a good glob of cheap RAM solve the streaming issues most economically? Say 4GBs of whatever the cheapest DDR is.
No, because you can't guarantee to have the tiles of the upcoming area present in that 4 GB, you can not avoid running into the worst case from time to time. Granted, if memory is so low that turning 180 degrees will already drop some tiles then it's a cheaper solution. But overall, it's preferable to bring the worst case closer to the average case.
I don't think flash RAM as a cache is going to cut it unless we can get SSD speed, which isn't going to happen affordably by next-gen.
We'll see, I think a lot of devs would really like it. Noone has really tested what it could do yet, because no system has it included as a default, but I'm sure it'd make a lot of other new tech possible as well. Imagine what a GTA type game game could do with it!
Although I'm personally wondering about whether an SSD can last for a console's lifespan without noticeable degradation - it'd be bad if one would have to replace it...