Xzero, the guy that wrote a ton of shaders for Crysis 1, even fixing AF + POM, now that he works @Crytek says this
ou'd be amazed by how bad C1 is in terms of optimizations. You'd also be amazed by how much merging shaders can help speed up the engine. CE2 was a huge waste of resources, it really was. Just.... trust me on that.
I hope you realize a lot of the shaders I wrote include several things that are in the new engine, such as linear lighting or consistent specular lighting. The lighting in CE3 is unarguably better and so the console versions of C1 will also benefit. Don't underestimate physically correct lighting and correct math.
Anyway, tetxures, objects, LODs, all of these things were not well optimized for memory usage in CE2. With some correct optimizations they could easily get the game to run within the consolelimits. Again, the game was actually horribly optimized, and everyone at Crytek knows it. Everything from the assets to the post-process pipeline wasn't given much thought as they were purely PC at the time. The move to consoles really opened their eyes to it. And now CE3 runs as smooth as butter.
Though obviously draw distance and texture res might suffer a bit more, but honestly the original game's textures were crap too. Most of them are just 512x512 (some are even 256x256!) with some detail-bump mapping applied. Most people have sugar-coated their memory of Crysis' textures.