That is just completely wrong, modern day games (without pointless mega-texture) use vast "extended" tileable textures that are made at resolutions of 4kx16k or even more than that (and then reduced and cut into proper tiles for games) - variation is introduced in each tile so that they can be re-arranged and switched around, detail variations are created for specific level sections (which can be put together in any order)
This means that "pointless" rooms can be detailed with an incredible sharp well made texture while important rooms are fully detailed with the full extend of all tileable textures including layers of dirt and decals.
That means rooms that with mega-textures have been given a whopping 80 pixels of colors, and i am not even joking with that, could have been made just as dark but with 3 or 4 full 2048x2048 tileable textures (and you'd never even notice it) except it at all times would be so sharp that you could count the pebbles in the concrete
The difference? Well oh boy, the difference is that your 6 tileable textures are INSTANCED that means they use vram exactly once. Instead you have the "oh so mighty" megatexture vasting hundreds of megabytes of memory for every unimportant room, for every blurry doohickey and for every blurry ass vending machine again and again.
Also what megatexture also can't do is racking up resolution on things that are often in your face, like the wall in front of you or the floor in "high importance" hubs. In Rage that wall and floor is always a blurry mess, in other games (notable BF3 beta, or Crysis 2) that room has an extremely sharp high-res, if tileable and reused texture. But at least it ain't blurry.
Secondly mega textures can't do destruction or dynamic terrain modifications (like the craters in the BF3 beta or in BC2..)
Thirdly, mega textures can not do sun and night cycles, because AO and (large scale) shadows are baked in. Thats also why they can't do destruction, any modification of the geometry would break the texture.
The only thing superior about mega texture is its obsolescence. As you correctly noticed, half the game looks like a Matte painting in distances, and in those situations thats EXACTLY what could have been used instead, if the Matte paintings in say games like ME2 were just twice that res they would be extremely sharp, and more importantly indistinguishable from actual background geometry.
The only thing mega-texture does well is terrain, except that terrain is static and that means this engine was already "last generation" before BC2 came out.