yes the graphics from a 3d standpoint will require some optimization. INterpolation or using a non native resolution would also not be ideal as any gain you would be able to harness in the lower resolution would be lost in having your output buffer running behind another layer.

With a little work the phone's hardware set is more than capable of running this type of game. Where the N900 can outshine other phones is in 2d processing (as this is less intense and detail would not need to be dropped) and cut scenes utilizing a non 3d engine.

The reason I say this is because the 3gs has the same hardware as the N900. It gets to do it's thing on a lower resolution, a disadvantage the N900 does not share. However, becuase of this extra screen real estate 3d processing will appear to take a hit when paired directly against the 3gs. Unfortunately the average consumer is ignorant of this, and will more than likely continue to blindly kiss the rear of anything apple.

2d