No, you are wrong. Only photos from the cinema mode are either 720p or 1080p. The game itself doesn't even render at 720p. Maybe it's 600p or something, but it's lower than 720p. The graphics are disappointing. Not because of the art direction. Everything looks fine. But you notice immediatly that the game runs at a low resolution, because of all the horrible jaggies and sometimes it's just hard to notice the details (i find it hard to watch the lips from a speaking characters that stays beside you). The game has no AF and no AA. The lack of AF is really hard, because HALO 3 provides some nice textures. But it seems as a waste, because if you don't stand in front of something the textures looks mostly blured. I even wouldn't care about AA, but the resolution lower than 720p and the lack of AF make it underwhelming from a technical point. It's really a big shame for bungie that a first party with that big reputation isn't able to deliver 720p or AA. Everybody spends lots of money for an HDTV and Microsoft is advertising it's NextGen console for HD gaming, but bungie isn't even able to deliver the minimum for NextGen gaming: HD. I don't even talk about AA or something. I really like the way HALO 3 looks and the MC looks at least as a good as a character from GoW like Marcus. But the game provide nothing stunning or technical superior that would justify the lack of at least 720p or 2xAA. And beside the lack of these points, the game only runs at 30FPS and even that isn't rock stable.
Don't get me wrong, the game is awesome and i am playing it at legendary. The music is awesome, the AI is awesome (at legendary), the lighting is awesome. Everything is harmoniously. But the graphics are a little disappointing from a technical level (i don't talk about the content or art direction).

Whatever you feel about the graphics, they don't run at 600p. It's a 720p game. Show me a framebuffer grab from a devkit at 600p and I might change my mind but there would have had to have been one hell of a downgrade from when I last saw it.

Hell at 600p they get 2xAA for free on the EDRAM.

You look at macro blocks. You will get stepping like 3:2 instead of 1:1 and such. It is all about ratios, and at high resolutions (notably the camera) you can mark off the macro blocks and then step them.