I think people may put a little too much emphasis on the character your controlling in regards to realism in Killzone 2. The reload animations, weapon recoil and the heavy feeling while moving your character is spot on. Although not everything is perfect. I would like to point out though that being able to sprint while reloading a rocket launcher isn't exactly realistic. In my opinion its everything around you that really adds to the realism.

The enemie animations are the best I've ever seen, same goes for your squad mates. When the Helghast are coming through the windows in the warehouse it looks like a non-interactive cinematic but you can totally shoot them while they come down. The physics here are also spot on. In the demo, when your in the warehouse its always fun to shoot the exploding barrels because everything around the explosion looks realistic. Always at a steady framerate too. Plus everything that is going on around you makes you feel like the games attention is never on you and your not some super-soldier that is going to change the tide of battle by yourself.

Also JKtrix pointed out earlier about your squad mate saying different things while he lifts you up onto the ledge after the tank fight. What is impressive though is that I've been through the demo 4 times now and he has said a different thing every time. Not game changing by any means but shows how much attention really went into this game.