For them to ray trace for PS3 games they first need to do it on a PC so they would need this. Imagine what Gran Turismo would look like if it was ray traced. What is aliasig like with ray tracing anyway? Does it need any form of anti aliasing or is it free from jaggies?

I think you miss read my statement. I said that the next generation of consoles will incorporate real time ray tracing in some form or another. Ray tracing simply (understatement) casts a ray at a pixel or sub pixel level into the scene and traces it's path back to the light source(s). At it's most basic level ray tracing can be done in real time with current hardware technologies, and I even pointed out in a lower post that I had witnessed a real time ray tracer at a siggraph around 5 years ago.

The key elements in the speed of ray tracing are how complex the interactions between the ray and the objects in the scene are, and how many rays you are tracing aka the resolution. The more objects in a scene the more things each ray will have the potential to interact with. When dealing with reflections one has to decide on a loop cut off point to prevent infinite reflection loops, the fewer redundant reflections the faster the calculation. That being said we could ignore ray traced reflections all together and just go with ray traced shadows with no penumbra, and that would significantly increase the speed of the rendering. Ray tracing isn't an all or nothing process, it's a process that can be scaled to match the hardware that is handling the rendering.

As techniques and technology improve the level of ray tracing can be scaled to match. I do not believe that this or the next generation of hardware will be able to match all the effects that can be achieved with non real time render engines; however, ray tracing definitely can be implemented in current hardware to some degree or Mental Images wouldn't be trying to use the Cell and RSX chips to do just that.

Grand Turismo 5 uses ray tracing in the garage. In real time.

He is right because it takes a cluster of PC's to render a Ray-traced scene.

He is wrong in that it has to be short, because if the power is there it needs to be as long as the scene is self-contained, and he's wrong about the PS3 not being able to ray-trace; as it only took three to render a scene from Linux; because the Cell Processor is a math monster; and if you get the math algorithms perfected, it can be done on one PS3

The key is how much ray tracing is actually being done. I saw a tech demo of a Ray tracing graphics card back around 2002-2003 at a Siggraph booth. At the time they were rendering a teapot with full shadows and reflections at roughly 640x480. I can't remember if there was any Anti-Aliasing, and they were getting roughly some where in the neighborhood of 15-20Fps. The problem is that a ray being cast per pixel or sub pixel gets significantly more complex with every object, refraction and reflection it has to deal with, and that's not even getting into things like ambient occlusion, sub surface scattering, global illumination/ radiosity and other time consuming effects.

Fortunately for game purposes many of those effects can be baked or faked well enough to function in real time; however, as(or if) mental images manages to get all the functions of mental ray working in real time there will be subtle changes in the quality of the images we see. Most people will not know exactly what changed, only that for some reason things like the glass looks more realistic, or the milk seems more creamy. Eventually we'll see creatures like Gollum start to appear and that will be a very cool day for game visuals.