As I see it, the OP is frustrated that people mistake mere graphics (and in particular, realtime raytracing) as the gold standard for "realism" in games, when there are open problems both more challenging and more important that are still unsolved (truly dynamic behavior, scalable content creation).
I don't know about industry, but in academic CS graphics is a huge field; by contrast, my impression the other problems mentioned are rather neglected (though certainly not unknown). However, graphics and games aren't my specialty; I would love to be mistaken.
No, actually he dismissed realtime raytracing out of hand on the false premise that it still requires manual artist texture creation.
We have solutions to "truly dynamic behavior", its called a physics engine. Scalable content creation has solutions also, i.e. 3d scanning and procedural generation.
Real time path tracing is where its at these days, not ray tracing anymore.
All of this stuff can go in hardware and it will within a few years. Main thing holding it back is a lack of resources. I.e., you have billions of dollars being spent on tweaking hardware and software for cheaty approximations and manual artistic endeavours rather than on advancing the technologies I mentioned.
I don't know about industry, but in academic CS graphics is a huge field; by contrast, my impression the other problems mentioned are rather neglected (though certainly not unknown). However, graphics and games aren't my specialty; I would love to be mistaken.