those screenshots are lookin fine... http://www.pcgames.de/screenshots/original/2012/06/UE4_Elemental_time_of_day_032.jpg http://www.pcgames.de/screenshots/original/2012/06/UE4_Elemental_Cine_screen_00032.jpg
Cliff mentions the whole budget/scale thing at the end: http://www.gameinformer.com/b/features/archive/2012/06/08/cliff-bleszinski-explains-the-next-generation-of-games.aspx
they have their own system and the algorithm they use is based on http://research.nvidia.com/publication/interactive-indirect-illumination-using-voxel-cone-tracing, see http://blog.icare3d.org/2012/06/unreal-engine-4-demo-with-real-time-gi.html
anyone see this yet, awesome looks like a new UI. Actually show him working in engine in realtime, everything seems to be going like crytek love it http://www.ign.com/videos/2012/06/08/unreal-4-engine-development-demo