When you say that CryEngine 3 is a step back from CryEngine 2, I'll just leave you with this .pdf:
http://www.crytek.com/sites/default/...20Features.pdf
Just because they cut back some of the settings and numbers of dynamic lights etc etc for console versions, does not mean the engine is worse...
and for that matter, ALL respect to Oleg and Luthier for amazing skills in various areas of game development, but I'm unsure as to how many HLSL shaders they have written....