Good read, a couple of things though:
I think a lot of the side problems you mentioned come from games trying to become more mainstream than they should be. People have been complaining about "fandom" which involves everything from comics to video games for as long as it's been around. Complaints about violence in video games and the "horrors threatening your children at the local arcade" existed back when things like "Donkey Kong" were new, and people still used wire-frame graphics. The urban legend about "Polybius" arguably has it's roots in this kind of paranoia. In short the guys who are going to be screaming about violence in current video games, would have been yelling about it when it was sticks and dots, and given the opportunity would have been railing against comic books in the efforts that created the original comics code authority. "Realism" in games has nothing to do with it, and never will, it just presents something that can be tacked onto an argument as old as the medium and which would continue using whatever games were doing at the moment no matter how unrealistic.
The problem is that games have become mainstream due to gaming companies and those in them, both at the producer and developer level, wanting to become filthy rich as opposed to simply making a good product for a fair price. Nowadays they don't want to reach a profitable niche, today the developers expect to pay themselves from development budgets that can be in the tens or hundreds of millions of dollars, and producers expect to move hundreds of millions of copies of a game in order to make the level of profit worthwhile, it's not about making ends meet, or a decent profit, you need monster profits to justify yourself. This means that to reach these goals game companies need to try and make their games as appealing and free of offense as possible in order to reach as large a group of people as possible. This gives those complaining about games an unprecedented amount of power in proportion because any market share they can influence becomes a factor in the eyes of the cigar-chomping business moguls. Today the basic plan is to try and design games around a checklist of features contrived by a broad focus group, and make a game as inoffensive as possible to get as many buyers as possible, and to that anyone with a reasonably big platform and potential influence represents a threat.
In general the reason why "people" care about things like foreign soldiers being gunned down, is not because it's so realistic, but because the gaming industry has cast it's net so wide that your typical FPS game (for example) needs to move hundreds of millions of copies and that includes people deeply invested in the leftward side of the political spectrum, not to mention potential sales in countries in those countries that are generally speaking the real life "bad guys" we face every day. China for example is the new evil empire, running a robber economy, building up a huge offensive military force, and causing problems for the civilized western world. Needless to say they are pretty much everything you need for an unambigious bad guy in an action movie or game. Of course media producers today don't want to use them because the demands have become so high that they need to be able to sell their products in the Chinese market as well as elsewhere. I use this example because of the way games like "Homefront" and movies like "Red Dawn" were edited after the fact to remove referances to China as an aggressor and criticisms of it's policies in order to be sold there due to the money to be made from that market. This is before you even consider domestic "peace at any price" sentiment. The reasons here are such that if these games were being made with old Vectrex-style Wire-Frame graphics and all the soldiers looked like "Otto" from "Berserk" people would STILL complain, and companies would have to listen because of their own demands that they move stupidly huge numbers of copies...
... or simply put the problem isn't the graphics, it's that when you start trying to make something for everyone it tends to suck, you can only cast your net so wide and produce something of substance. Quality productions require more focus and a narrower audience. On a lot of levels one has to wonder what would have happened if the guys doing "Homefront" or the "Red Dawn" movie hadn't had to spend a ton of money editing the product part way through production and made their product for a more focused audience as opposed to trying to make it as unoffensive as possible. The problems with both of those products was that even before the gameplay problems you had to deal with a totally mind blowing premise of North Korea somehow managing to launch invasions across the entire planet, when it doesn't have the technology, power, or position to do what is proposed... which China, the original enemy intended in both works, does, especially seeing as China could very well bring a lot of it's buddies like North Korea along for extra firepower in a situation like the ones proposed in the game (as opposed to North Korea somehow doing it entirely on their own).
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Do not misunderstand though, I'm not entirely disagreeing with this article. For the most part I do agree that there needs to be more focus on gameplay than graphics. The graphics shouldn't suck, but the prettiest graphics in the world don't matter if the game underneath them is a dog. I've been saying that for years, and honestly have been appalled that rather than developing good games based on things that work, we've instead seen all kinds of buggy motion gimmicks and such which even if they are worked out still miss the point that when I game I want to relax and sit back in my chair, not flail around my living room like a spaz... which is particularly jarring when you live with other people.
At the end of the day for me it's not really going to be a matter of which company can "wow" me most with their graphics quality or gimmicks. To be honest, I'm not going to be looking at individually rendered arm hairs anyway, when things are moving at decent FPS (Frames Per Second) and I'm actually doing things in a game it's not like I'm going to want to pause and hit the ultra zoom and go "hey look, if I go far enough up Kratos' nose I can see each hair rendered invidually and they all even seem to move in time with his breathing as he moves and fights!". At the end of the day it's going to be all about who has the best titles and games I actually want to play, and for me that's going to be RPGs, especially turn based ones.... the kind of games that tend to be ignored by developers because they aren't snazzy and bleeding edge enough.
That said, I'll also remind people that workers need to be paid to create all these graphics. Paying those workers is the big cost in making games (in the scope of these budgets office space and computers to work on are minimal). Individually designed and animated arm hairs are something that a professional programmer is going to be working on, and he's being paid out of the game's budget which increases the cost and contributes to a lot of problems. Out of the tons of guys doing graphics for these games, the fact that at least one would arguably be in charge of creating digital arm hair is kind of offensive since that's effort that could be put into other aspects of the game, or just cut entirely which might mean they have to move ten thousand less copies or whatever.... the point here being that with increasingly large and expensive design teams and companies like Squeenix claiming they couldn't afford to do enviroments like the ones from FF VII anymore (hence no remakes) with the current costs of technology, certain innovations while technically interesting are actually a bad thing. They should be focusing on doing more with less people. All the tech in the world is pointless if it's too expensive to use even so far as creating updated versions of things done in the past. A company basically bragging that they are going to pay a guy to animate arm hair (which in an offhanded way this is) actually has the opposite effect of what they probably intended. Not to mention it will be galling to learn that some guy got paid top dollar to say individually render the strands of hair in the armpits of a sweaty barbarian in a game where the fundamental combat mechanics and collision detection turn out to be broken.
To be honest I'd be content if they could just get graphics developers with enough competence to make models where the cloaks/hats/hair/weapons don't clip through each other. MMOs are especially terrible about this. I find it hilarious and depressing at the same time that companies like EA and Bioware like to scream about being so great with games and graphics and yet it seems 90% of the vehicles you can actually sit down on in "The Old Republic" cause your cape/cloak/tabard/whatever to clip through them, and given that huge numbers of outfits feature those embellishments... it can be trickier than you think to find a decent costume/vehicle combination that doesn't turn into a nightmarish graphical jumble.... the guys developing the new hardware/games guarantee and deliver on stuff like that not happening (it happens in a lot of games) and I'll be sold a lot more than promises of cooler arm hair.
