Anyone with a brain who paid attention on Day 1 would have known the truth - the vids as 'visualizations', whereas everything else that was realtime was clearly called realtime. Trouble was instead of going 'okay, they're renders' everyone kept asking the same question over and over - 'are the real?' at which point the PR got stretched and regurgitated, perhaps Chinese Whispers fashion, fuzzying over the truth until some spokesperson(s) gave straight lies to the question. Were lies told? Yes. From Day 1? No.
As for KZ being the be-all-and-end-all of PS3, I find it hard to believe that Joe Public will not buy a PS3 in 2008 on account of one game being released not matching its CGI 'previs' some 2.5 - 3 years earlier. No matter how much the internet may implode if KZ looks either pants or even better than the 'trailer', that doesn't swing the entire market. There's plenty of crap looking titles on every platform, without people being deterred from it. What if KZ doesn't live up to the hype (and speaking of hype, who has hyped KZ? Apart from a 'trailer', it's barely been mentioned, so for those saying it'll be the most overhyped game, it'll be the media and fans who hype it judging by current behaviour!)? As long as there's lots of other titles that attract people, the console will live on! I'm not going to refuse to buy PS3 for LBP and RnC and Drake and whatnot, just because KZ doesn't look like the CGI. That'd be a crazy basis of a purchasing decision! If it has the games you want, at a price you're willing to pay, you buy it. PR and marketting and faux pas etc. aside.