Hey, I'm the Engine Lead at Artificial Studios.
I must admit we're guilty of laziness in that lobby scene. The lobby was something we threw in at the last minute to demonstrate some nice bump-mapping, parallax, and HDR. I believe the textures were from an old ATI demo, but Humus had done a good job of showing them off in his demo, and our artists hadn't quite grasped the concept of good parallax maps, so being out of time we just threw them in. However those were freeware, and absolutely everything else in all our demos were made in-house.
As to our demos. The Mansion demo was mostly finished in 2003, when the best card we could get was a 9700. We squeezed out every possible feature we could on this card, but of course it's impossible for a 2003 demo to rival a 2004 UE3 demo when they are running a native ps3.0 DX9-min pipeline! Furthermore we've got a very small art team compared to Epic, so it's hard to compete on raw presentation.
Our feature set matches UE3 quite closely these days. In addition we have some things they do not. For example we have adopted PRT as our core pipeline, with heavy tool support. Absolutely everything in the outside world now uses this for the base pass, with our per-pixel effects on top. The Backyard demo is the first example of this. Seeing it in motion is quite something. All interreflections, subsurface scattering, soft shadows transition as the day moves to night, the sun goes down and the moon comes up.
Epic on the other hand have stuck to lightmaps multiply blended with per-pixel lighting for their core architecture. I believe this is a case of legacy technology rather than the demands in the 2006 timeline. We can scale our PRT scenes better than we could our per-pixel scenes! The Backyard demo actually runs decently on a Geforce3. I'm working on normal-mapped LDPRT for our character demo. Keep an eye out for that ;-)
We also have some really cool content creation advancements, such as our networked level editor. Anyone can jump on the server and modify the level then play a networked game at the click of a button.
Do we know what resolution on a R9700 that video was made on? Any AA? AF? Tunings on a R9700 just for the purpose of the video? CPU?
The scene ran ~35-40fps with FP16 HDR at 800x600 on 9700 Pro, with a 2Ghz Athlon. Video sys specs were slightly different, capture software takes a huge hit. We had an insane amount of per-pixel lights lying around, nothing was static, and we applied rigid body physics to everything we could. Was quite a stress test ;-)