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If Witcher 3 is not going to be consolized or dumb-down, perhaps REDEngine can get an upgraded engine for DX11 (Tesselation + Displacement Mapping, Parallax Occlusion Mapping, etc.)

Have a look on what to expect with DX11.. it's a Crysis 2 DX11 support video (

I honestly feel that REDEngine can get an improvement on the water. The scene in the Elven bath could certainly get an improvement in visuals.
it all depends on if the next gen consoles will be out by the holiday season in 2012 :P if so, I bet you it will be dx11 :P if not, dx9 will be it :(
Most cut scenes in TW2 were low res and not very good. It was the in-game stuff in TW2 that impresses, and does not need any visual improvements imo.
Looking at the file types I believe all the RedEngine is is a modified version of the Unreal Engine. Seeing the pathfinding, and just about everything else was also licienced this is not a surprise to me- but there are far better engines out there far cheaper than the asking price of Unreal.