Yes, the game looks like this, though I've re-saved in photoshop to compress the size. Remember I've turned shaders and maybe even the material system off (these textures don't yet have any material settings) for the ATI thing.
But I really think it's just because the textures are too dark, and the lighting system seems counter-intuitive to me so I'm stilll experimenting. If I turn up ambient lighting too much, all the lighting is flat, even if I have added lights (ie - they are not additive, but are overtaken by the ambient lighting).