I tried the demo today on my MBP (2.16GHz CD, 2GB, 256MB X1600) with a fresh Win Vista 32-bit install. I installed the 7.8 "bioshock hotfix" cats and downloaded ATT (ATI Tray Tools) and overclocked the card to safe 430/430 clockspeeds.
The game is playable at 800x600 with textures and actors on high, high detail post processing is off. I'm not sure why other people get so great rates but that is what I got, doesn't matter much though, I won't be playing Bioshock on my MBP.
I didn't think the graphics were all that great (on the max settings), there are some cool effects here and there (and water looks really great) but the models are weird, lighting is confusing, uneven and unnatural and there is a disparity in the graphics quality among the game, also no AA. Also textures lack detail, thankfully the game doesn't lose any of its atmosphere because of it and the locations are masterfully done. Point is, I've definitely seen better looking games from a technical point of view but Bioshock ranks pretty high up there as far as artistic appeal goes.
As for demo impressions, I honestly expected more out of it, the level presented in the demo was just too linear and the two plasmids and weapons available were not that interesting to use, the only thing cool to do was electrocuting foes in water but that got old like the first time you did it

Also the game was too easy, sure it was fun coaxing enemies into getting into water but its kind of pointless when they do very little damage to you and the wrench disposes of them pretty quickly. I'll def' be playing on Hard.
The real purpose and appeal of the demo is nothing more than providing potential buyers a tool to measure performance and to introduce them to the story of Bioshock and the world of Rapture, the demo lacks as far as gameplay goes, I'm already sold but I can definitely see why some people were fairly unimpressed.
My recommendation is playing the full game before giving your verdict, I'm going to buy it soon and hopefully it will be what I am expecting it to be (great story, great atmosphere and setting and awesome "sandbox-like" combat). I'll definitely be getting because I'm damn interested to see what happens with Rapture and I'm interested in the sandbox-combat system and gameplay, even if the demo fails to show it miserably.
Okay I'll post more thoughts and impressions (probably in a new thread) once I get the full game and finish it (or at least play it quite a bit).
It is 5AM here so its off to sleep for me now
