Well, I think that the in-game graphics are some of the best I've ever seen - if not
the best. Particularly the character animations: amazingly fluid and life-like. The facial expressions have to be seen to be believed. Personally, I think that the in-game cutscenes look better, and are more entertaining to watch, than the FMVs.
Here are links to a few in-game cutscenes (for those who don't mind
SPOILERS):
http://www.youtube.com/watch?v=GkSWq...0fantasy%20XII (loooooong but
magnificent video of in-game cutscenes - interspersed with FMVs)
http://www.youtube.com/watch?v=Y1Fem...0fantasy%20XII (another looooong compilation video of random cutscenes; the first scene is especially involving, and completely disproves the claims that there are no character interactions in the game)