The absolute ideal would be that CPU's get fast enough that you can do everything you want in software, but that's a long way off.
Raytracing the whole shebang is still not realistic at the moment, and I don't think it will be for some time. Presumably, even if you're raytracing, your models will be poly-based, and even with high end kit, realtime raytracing is not possible even for something like the original Quake. I'm sure it will come one day, but could be a few years off yet, especially with the current cpu frequency barrier.
Raytracing the whole shebang is still not realistic at the moment, and I don't think it will be for some time. Presumably, even if you're raytracing, your models will be poly-based, and even with high end kit, realtime raytracing is not possible even for something like the original Quake. I'm sure it will come one day, but could be a few years off yet, especially with the current cpu frequency barrier.