I'm the guy who wrote the article.
. . . Ahem.
Anyway. Yeah, they're not pushing Lost Odyssey at all. Either that, or the fact that the chairman of the jury who selected the top games of the show is none other than Yoichi Wada, president of Square-Enix.
Maybe a little jealousy, hmmmm? The CESA organization also selected Final Fantasy XII as one of the two "Grand Award" winners for the 2006 Japan Game Awards.
Either way, Blue Dragon is the big hope. It's the one they're packing in with the system come its release in December. There are enough legions of fans of Sakaguchi's that the console will sell just fine. Don't predict a huge explosion of sales, though.
I think Microsoft is just playing it by ear. Which is good enough. There was certainly some PS3 fanaticism at the Tokyo Game Show, and it was certainly overwhelming; I'm sure Microsoft is aware of what they're going against and is merely not wasting too much time fighting the launch crowd. A month after the PS3 launches with Genji 2 and Ridge Racer 7, both games targeted at people who NEEEEEEEEED a game right when the console launches, MS has their must-buy game coming out.
I think it's coming out just in time, in fact.