See, fatson, that\'s where you\'re wrong, although I applaud you for your effort--when ignorants speak, it\'s always a good time.
The CG compiler is not a simple program that will write shaders with the push of the button. It\'s not going to spit out a bunch of crap and make everything slower--not even close. The compiler will free programmers and artists from low level assembly coding and let them focus instead on their algorithms in an environment they are more comfortable and practised in (C like). Assmebly, even for the most talented, is arduous and complicated and time consuming, all the CG compiler will do is allow them to express themselves in a more familiar language. Not only that, it will allow almost anyone in the industry to write and share ideas.
Despite what your PS2 whispered to you, programmers who were able to get great effects out of the GPU previously, will now be able to do it more easily, much faster, and since it\'s a common language, code can be shared between games and studios and improved upon even further. Optimization will be easier, and the effects will be better on average. Assembly (how shaders are written now) is only known and used by a handful of people in any given studio, now it is shared amongst the entire development community; and more minds equal more ideas and better graphics.
Sure, if an entire game was written in assembly it would theoretically be more effecient, but that would take a hundred years (literally). Optimization is often trial and error and ends up doing more harm then good. Now a 3Dmax artist can more accurately express him/herself, send that down to the real expert and let him/her go at it.
Also, getting the shader optimization out of the way more quickly will allow more time spent on more important things like AI, gameplay, etc..
This isn\'t going to give the xbox photo realistic graphics, but it\'ll make graphical effects (bump mapping, lighting, etc) more accessible and easier to manage.
This is going to put the power in the hands of the devs, if they use it, it\'s their decision. At worst, it one more thing that makes the xbox easier to use.