Then there is memory. The elephant is looking great, no doubt about that. But I think you will need a lot of space for it. On a PC this might work, but I'm not sure it can be used on consoles.
They might have to resort to polygonal collision models in the same way that polygonal games end up using low-poly collision models (with the same pitfalls such as moonwalking, blocked projectiles or mystery-bouncing).
But overall it's a great demo. And you see more and more games using voxels for surroundings. So ofcourse you could combine this technique with polys.
Here's to at least getting a hyper-real Myst someday :)
I do feel that this author is a bit further along at something ship-able than the Euclideon folks are though.
Realistic movement is a more important factor than detail, you can have 8 cubes move fluidly enough to immerse in. 1,0000,0000,0000 polygons seems un-important when you have pixel shader's and normal mapping.
Maybe they should of made duke nukem forever with this engine, as it seems like its from a similar era.
The new frostbite engine 2 a million times amazing, because of the dynamic lighting and radiosity. Plus the amazing fluidity of the animations.