No, no game in the last 3 years has taken a huge leap because they're running on 6 year old hardware. Low resolution textures, and a low resolution with no great AA, and relatively low poly models with decent-but-nothing-special shadows is very far from photorealistic. At least, very far if you're not legally blind, anyway. High end PCs can render truly photorealistic visuals, but not in realtime.
Also, why go for photorealism? I know the real world, it looks boring. Bring me fantasy in my fantasy RPG.
Yeah I agree.
Although PCs can indeed render photorealistic visuals, or at least kinda close, and in real-time.
These are not the perfect examples, but they're the prettiest I can find. 1-8 are from Crysis, obviously

The 9th one is from a real-time rendering. Best wind on trees I've ever seen.
http://h-2.abload.de/img/2pblu.jpg
http://i47.tinypic.com/2n9gy7a.jpg
http://h-7.abload.de/img/2nuq3.jpg
http://www.geekstir.com/wp-content/uploads/2010/07/reallifecrysis.jpg
http://www.gamerdna.com/uimage/Ifo1enYR/full/crysis-vs-reality.jpg
http://www.incrysis.com/incgallery/247.jpg
http://www.theoldbreed.com/imagehosting/68495b11b78f360.jpg
http://img262.imageshack.us/img262/3184/normal11737467062256c60rd5.jpg
http://www.youtube.com/watch?v=JjZc9ayGlaM