Nebula, to a certain extent that is right, the settings really aren't that high in that L4D2 vid, but considering that equivalent to even the likes of some big console hitters lately would not be justifiable. HL2 tech is what it is, its old and its plain, not bad by any standard, but not thwarting any big console hitter as well, and that includes L4D2's PC version as well.
Also I've played only two Valve games: HL1 and HL2, and both have been serious glitch-fests, especially the second one, pretty as it may be but damn it had its share of grudges, from graphical to stage-ending glitches etc.
Also being flat water doesn't mean it is bad technically. By you highly praised U2 water is 2D surface with simple low-res ripple shader. Still looks good except IMO ocean water in train scene for example (low-res, static reflection using cubemap and awful shading).
Obviously its not bad at all, Mafia 2 etc really have amazing looking water and stuff though it ends up being a texture detail, thats all.
OK I don't know low res ripple-shader in U2, the point where Drake jumps into that swimming pool, it was like megaton kick-ass, totally can't make of low-res stuff, and also that having a 80k character model in there with other physics flying around and huge draw-distances, tangible vegetation in really amazing looking jungle etc etc, and especially that organic-collision-deformation like "moving-platforms" with shifting physics...
its a wonder they even bothered about considering water interactions(more questions for Valve being on PC) and damn that U2 water with real-time reflections, proper transparency and that 'ripple' effects is certainly a 1up+, obviously questioning what Valve and lots of other PC devs have been doing with so called ultra-powerful GPUs except higher resolutions.
Also I do wonder why even that
low-res, static reflection using cubemap and awful shading as in that train sequence of U2 is not employed in any PC big-hitters for the ocean... even when everyone points out the blandness of a lot of 'em there?