I'd imagine they have been finshed messing with the grpahics for a while and are on to playtesting and such, at least if they plan on releasing the game any time soon.
Even Soul Calibur III on the PS2 had pretty incredible backgrounds. Easily the best backgrounds of any fighting game before it. I wouldnt call those photorealistic though. Definately a step in the right direction but thats taking it a little too far.
What the?
Why have people been saying that since the new (and not that great) pictures came out?
Thats not a fault of JPEG compression, thats the texturing. You really don't understand compression artefacts at all I guess.