"Creating high quality 3d art is extraordinarily labour intensive, and the tech to improve the toolset for the artists is not advancing as fast as the ability to push more content to the screen."
Yeah, well, i'm sort of not completely agreeing.
It is still the case that a lot of hi-end productions do the production in much higher resolution than needed and scale that down at the end of the process.
If you look at the PS3, with it's dual-256MB memory, you can easily see that there can't be a lot of stuff on screen texture wise.
So in that case you will need to optimize the hell out of your artwork and use clever programming tricks to get the extra level of detail you see today.
Creating 3D art is peanuts today.
There are great tools that let you add lots of details from a macro perspective, there are fantastic modeling, texuring, shading and animation tools that intergrate into game design workflows etc.
The labour intesiveness has literarrily become a stroke of a brush.
Meanwhile we see complete CG movies with way more detail in them costing less to produce than some AAA games.
It just cannot be the artwork alone, not anymore.
Sure, if you want to invent your own engine then all tooling is up to you. Which means that artists will be hamered by your own lack of sophisticated tools.
But that doesn't mean that there is no good workflow available for creating assets.