We also were promised real-time raytracing if we ever got to that point. What's the hold-up?

Real time raytracing is vary doable and high quality, it's just we got really good at rasterisation. Consider a 2012 demo http://www.youtube.com/watch?v=h5mRRElXy-w it's cool and all but what seperates it from rasterisation is fairly subtle and the computing costs are rather high.

Thanks for sharing this. I'm actually really excited; raytraced scenes have a "solid" feel to them that rasterized ones simply can't get.

The number of rays needed to realistically model raytraced objects turned to be much higher than we ever expected, as far as I know.

The expected display resolution probably changed too.

You can totally do real-time raytracing. I wrote my first raytracer a couple of weeks ago — http://canonical.org/~kragen/sw/aspmisc/my-very-first-raytra... — and it gets about 4fps on simple scenes on my netbook, despite being the product of only a few hours of work. If you use a GPU and/or SSE and/or a faster CPU, you should easily hit full-motion video.

My netbook is probably half the speed of an iPad.

It would be fun to put together a custom OS-less AMI to raytrace partial frames in realtime on EC2. 20 instances spun up in a few hundred milliseconds could do pretty substantial real-time raytracing.

Real-time raytracing is easy, if you can live with one or maybe two bounces.

Alternately, do lots of bounces with fewer rays, decrease the total dynamic range, and add a consistent noise/grain filter. Realistic raytraced night-vision :)