Probably because most PC owners don't have High end gaming rigs, they have core 2 dous or an i5, not overclocked sandy bridge i7's. If they made they game look like that, most people wouldn't be able to play it like that anyways, so they would really just be wasting a lot of development time on something that's kind of unnecessary.
And the reason this doesn't look like rage\ crysis is because, while those games look great, they aren't interactive environments, just pretty ones, which is not what TES is about. An example of that is rages engine, id Tech 5, which uses a massively complex texture system that is only designed to be pretty while run through it, and no possible way to mod it, due to its sheer complexity.
The interactivity is a very good point, and I'll take Bethesda's interactive environment any day over a prettier looking but inert world.
However, as for hardware, although you are right that most people don't have cutting edge machines, the bottleneck is not CPUs. Shading, bumpmapping, tessellation, multiple light sources, ambient occlusion etc. all make a great difference to the game environment are processed, AFAIK, primarily by the GPU, and PPUs (or GPGPUs, nowadays) are awesome for rendering complex environments and effects. The game engine
can be designed to degrade the graphics gracefully to the current "average" hardware, which would let the game improve over time (particularly relevant, considering the TES release cycle) as the hardware becomes cheaper and more people can buy it.
Of course, there's a development cost for that, and since the majority of TES players are apparently console gamers, and Bethesda needs to make money
now it's likely that we're going to be stuck with an old graphics engine even as today's cutting edge PCs become commonplace in a 2-3 years, and the next gen consoles come in.
The unknown variable is the capacity of the updated "http://www.gameinformer.com/games/the_elder_scrolls_v_skyrim/b/xbox360/archive/2011/01/17/the-technology-behind-elder-scrolls-v-skyrim.aspx" to take advantage of PC hardware, which comes back to my original question....
I guess we'll see...