I remember pretty well when people thought that the real-time gameplay demo of Killzone 1, during PS3 announcement, was complete bullshit.
Same pattern happening right now. People are just too cynical.
Lets not forget though that it wasn't a real time demo of Killzone 2 (if that's what you meant), but what they finally came up with didn't actually stray too far from that concept video.
For this they literally said that it was running on their new engine on a PS4, and after 'Killzone-gate', I doubt they would repeat that same mistake again, I don't think we are being too naïve in assuming that. Amazing as this looks, If you cram all these new lighting- and particle effects into a small environment like this, I believe it can be done.
If it could co-exist with other game mechanics and AI is a little more doubtful, but it is a real time demo.