Unlimited Detail Returns with Euclideon Island Demo 2011 – Is this the future of game graphics?

One year ago, Euclideon claimed that they have found a way to offer amazing graphics and astounding detail to current generation games. After its bold statements, the studio disappeared and re-appeared today with a brand new video that showcases their new game engine. Well, if this actually real-time then we might have a strong competitor to both CryEngine 3 and Unreal Engine 3.
The company claims that they were running the Euclideon Island Demo in real-time and let us tell you that if this is indeed real-time then we’re in for something truly amazing. One thing that kind of stinks is the lighting but the company promised better lighting with their next engine demonstration.
Unlimited Detail is a 3D computer graphics point cloud rendering system. It is unique in that the system’s computational cost of rendering closely correlates with the displayed resolution as opposed to the detail of the underlying scene. It is currently being developed by Euclideon who claim that it works by determining which direction the camera is facing and then searching the point cloud to find only the points required to be displayed on the screen with unneeded points not being touched.
Enjoy the video and tell us your thoughts. Is this real-time or not?
Unlimited Detail Real-Time Rendering Technology Preview 2011 [HD]