It's the use of the term in-game that is sometimes misleading.
In-game footage often turns out to be simply footage that is rendered in real time using the graphics engine, but isn't actually footage of gameplay.
I'm sure it's relatively easy to produce a decent looking video using the in-game engine when you can control every aspect of it. The actual graphics used during gameplay have to be able to cope with a number of different factors.
The photo mode in PGR3 is a good example, it uses the same engine as during gameplay, but looks a whole lot better than when it is running at full speed.