GTA4 had some great animation using Euphoria, and BF3 has really seamless animation using their Frostbite code. It makes me hopeful that one day Arma will also have such fluid animation.
This clip does show incremental improvement, but it is all hard-coded and could really benefit with some of the dynamic animation from the two engines mentioned above.
As far as a cover system - no way! Arma already uses cover naturally, although it could use some refinement when shooting over different height obstructions. Actually, Operation Flashpoint Red River implemented this in a very seamless and useful way.
But every bit of improvement is welcomed and this will be another ArmA that will be permanently installed on my hard drive.