But it's an uncanny valley thing. When everything is uniformly meh, it comes together in a cohesive way that never disrupts your immersion. You accept the world on its own (slightly crappy) terms.
When it's a great engine with some noticeable failings, on the other hand...'oh, look, a graphical glitch! Oh, look, that texture is horribly low res! Man, that door is just a texture!'
See, I think I'm simply capable of overlooking little flaws like door-that's-a-texture, provided the experience as a whole provides me with some eye-candy graphical moments and vistas (and you can't deny that HL2, and especially the episodes, have some really stunning environments along the way). I just don't find that they yank me out of the experience at all. Along the same lines, I think I've found that the hi-poly MediaVP models have actually lent me a greater
appreciation toward a few of the nicer-looking retail models, though others definitely do stick out like sore thumbs. In comparison, when you go back and play something from the N64/PS1 era (or the comparable PC games of the time), especially something involving human characters, the combination of those blurry lo-res textures and blocky models just lends itself to a visually drab appearance. You look at something like Ocarina of Time, or Goldeneye, or Final Fantasy VII, and they really
don't hold up visually (though from my experience, OoT still managed to have a few environmental thrills); even though the graphics may be cohesive in technical level, that cohesiveness just makes everything seem somewhat bleh. Those screenshots of the original Half-Life engender the same sort of response in me, whereas in HL2, I was more along the lines of, "Ooh, look at that sunset! Those Striders look awesome! Check out Alyx's facial expressions!" while ignoring the occasional blurry textures.
(Interestingly enough, I feel like the SNES/Genesis era has this problem greatly reduced vs. the PS1/N64 generation, since the former represented somewhat of a zenith for 2D graphics, as opposed to the latter's first simple forays into the 3D realm.)
On a related note, I don't really know anything about the realm of game engines as a whole, but based on the hardware I have, I was amazed that the Source Engine managed to perform as well as it did on a low-end box and still give me a decent amount of graphical oomph. I've heard that Valve takes some care to keep things very scalable, and it definitely worked for me. Even with my 64MB Radeon X300 card, I was able to get some nice pop out of Portal and HL2 Episode 2...not HDR or anything, since those would have slowed me to an absolute crawl, but some pretty awesome normal map shadowing and the like.