I'm sorry if things aren't going well for you blackhole.
I'll say it again. Technical capabilities aside, and certain devs take fire for this, the modern marketplace in the frontline of interactive entertainment is to make they're universes as dark and dramatic as possible. This is bad from multiple standpoints, but firstly and foremost among them is that they all begin to look the same.
It all becomes a case of "Oh look! Yet another emotionally tortured anti-hero in armor that I can't see cause it's too dark and gritty!" I'm not saying I want the Gears series or "Doom" to turn into "Hello Kitty Island Adventure!" But I find them less interesting because my eyes are doing what everyone's eyes are and I can't see them as well as I used to.
That's one of the reasons I enjoy Warcraft so much, the world is dark and has dramatic things going on it, but the world itself is colorful and engaging, not Burned Out Cityscape #63 or Industrial Corridor #10 or something, you can tell the most dramatic, epic story in the world with Ocean Group VA's and Hollywood "A" Listers, but if the graphics and visuals don't act in support of this story by engaging the eye of the player it'll all be for nought. Best example I can think of outside of Warcraft is Beyond Good and Evil, that was a dark, dangerous place without being dark and depressing, the world is vividly colored if not bright and some of the design work lends itself to and reinforces the oppressive atmosphere in the narrative. Also, if there's nothing left for me to save, why am I playing the game in the first place? If the world ended and we're still fighting, it's just a grudge match at that point, and while grudge matches are fun, I don't wanna spend $40 and 20+ hours of my life getting to the conclusion in burned out cinder after dark, dank cave after abandoned apartment building.
Do I think game engine technology has reached it's zenith? It's close, there's only so much you can simulate on an inherently 2D surface. I do think that they'll continue to become more efficient and that eventually we'll be able to have photo-realistic characters rendered real-time.
Do I think that the designers are utilizing this power? I'm ambivalent, certainly they are utilizing the full technological power they are given, but overall the quality of storytelling, graphically at least, has declined in the current generation of game makers.