People are talking too much about graphics, and not enough about optimization. You can have an amazing looking game and still run it on average hardware, it just matters how well the software is optimized to work. With the rushing and way too early release of FFXIV 1.0, of course it was going to chug cause the software wasn't optimized, let alone for PC systems (remember this was the Crystal Tools, something design for PS3 games).

I'd say this though, whatever LoD algorithms SE was doing on 1.0, it was damn impressive. You'd look at an island in the distance and that island was a real place, not a low-poly model (well, thanks to the LoD algorithm, it was low poly in that instance but I digress) or 2D billboard like ARR uses.