That is most likely an in-game screenshot. I saw their presentation at this years GDC and the dude actually played a short flying portion of the game, and it looked that good. They also showed about 3 or 4 of the dragon models in softimage, both super highpoly, and the reduced ingame model, and both looked amazing. The game basically looks like rogue squadron with dragons... Also remember, it is a screenshot, and the camera is likely framed up specifically for that shot, or maybe even for a cinematic. So naturally, it is going to look a lot better and more dramatic than a simple screen grab of a dragon flying in the middle of the screen. And of course, they dont have a lot of environment to deal with...
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