It seems to me the one and only reason for the texture issues in Rage is the simple fact that thanks to Bethesda, it was a console-focused game. The texturing technique relies even more heavily on available memory than traditional texturing, and with consoles that resource is thin at best. So the quality of the mega-textures over-all was reduced 'specifically' to make the game playable at high framerates on consoles.
I think if we see a PC focused game using the technique, we'll really get to see the technology shine. Even in Rage IMHO the graphics were largely amazing, the gameplay was very tight and the animation system was revolutionary. The only thing I didn't like about the game was the cut-off ending.