The first footage was engine renderings, realtime. It wasn't BS because that's what the hardware was doing. The latest footage is the actual game. It's not BS because...it's the actual game.They're lying when they show trailers that are not a indication of their actual progress. The current gameplay screenshots are not lies, the bullshit "showcase" and ones in the OP are lies though.
So I don't know what the problem is. The game doesn't look as good as the tech demo - games rarely do. And yet it's a WIP. It's not like from the tech demo, the current gameplay is absolutely what the game will be like. There's plenty of scope for the game to rise to the engine's showcased abilties. It would only be a lie if the engine was a fake. It would be a 'misunderstanding' if people expect the game to look as good as the tech-demo and it doesn't in the end (when complete).
Putting it another way, is the whole PS3 a lie if all the human characters in games don't look as good as the Alfred Molina tech-demo? Like SugarCoat says, don't take offense when tech-demo's don't represent the in-game results (which they might yet do...).