I have to admit, even though you will find nobody more gung ho on the issue of puppets-are-better-CGI-cannot-yet-replace-them whininess than me, I was astounded by the images in it. Saw it yesterday, going back tommorrow. Like you said, not yet perfect, but we're getting there. I think it's about another ten years, realistically, before we have CGI that's as good as actual objects. I know that sounds like a real over-estimate, but the last steps in this development are the hardest- little details like hair movement, eye focusing, light on skin and so forth. Plus, right now, Lucas has access to the absolute best graphics facilities on earth, so what we see in episode II is the very pinnacle, which is amazingly good, bust still just not quite there. Look around Yoda's mouth when he talks- still not quite natural the way the skin stretches. Another decade, me thinks, and we'll have it down pat.
Of course, when I say "we", I mean anybody. Yes, we have astounding CGI effects that now rival and will most likely replace standard puppetry soon, but remember, it's only accessible to the richest of the rich. As for the rest of us, the film-makers with little or no budget, it's still good old fabric paint, armatures, latex and imaginative directing that make the aliens walk among us. How long until even schlubs like me can make use of this incredible new technology? I don't even think we'll be alive to see it.
And, besides, good effects can't make the movie. Episode II comes close to that, but it has an okay storyline, too, and some good supporting acting. Take away everything good but the graphics and you get... well, you get that god-awfull final fantasy movie. Eew.
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