I guess you did not see the images from nVidia
One side "PS2" On the other "PS3"
And, now its out. It has abosolutly NOTHING to do with Pixel shader 3.0
Its a feature in the editor !
But i guess you would have to see the images.
Edit: Found em.
http://www.hardocp.com/article.html?art=NjA5%E2%80%9C
So ... It has nothing to do with shader model
Edit2: Well then, molle. Explain it to me then. Explain why nVidia's SM3 effect in FarCry can be Achieved with SM2 ?