X360/PS3 games being so close in visual fidelity is more of a happy coincidence than a purposeful thing. There are no such contractual obligations for parity. There are a lot of examples of games with very different frame rates and resolutions, especially early titles. There's also more recent disasters like Skyrim. People do take advantage of each console's hardware, that's actually pretty obvious if you look at early games from this generation and compare them to the latest games. The difference is night and day and you can't have that kind of massive quality jump on those two platforms without really specific optimizations for each one. They just happen to have come out very similarly.
I don't know what specifically was up with Rockstar on GTA4, but the majority of PS3/X360 games are very different when it comes to installs. With X360 games you can fully install *any* game to the hard drive. It basically copies the entirety of the data over and the disc is just for authentication. You cannot do that with PS3 games. PS3 games on the other hand almost always have a mandatory data install that they pull from to increase performance.
People misuse the whole "Lowest Common Denominator" thing a bit. It has very little to do with pure visual fidelity and mostly to do with core game design. AI, set pieces, level size, encounter design, how many things you can have and do, stuff like that. How many NPCs and Cars you can have definitely *can* fall under that. Though as seen in the leaked GTAV files, that doesn't have to be the case since the PC version is set to spawn a much higher level of objects than the PS3/X360 versions. At the time with GTA4 it was likely a design/engine limitation that did not let them set different object count rates.
The times when visual fidelity clashes with the "LCD" is stuff like Texture resolutions and people lazily reusing Art Asset Builds instead of making separate, higher resolution ones. Extra effects like grass, draw distance, reflections, shadows, etc, are all things that can easily be adjusted in scalable engines. Same goes for Resolution, Anti-aliasing, and AF for the most part. That's why all of that stuff is almost always very easily adjustable on the PC. If a console can take advantage of those "sliders" it will, they won't purposely hold it back for parity. At worst you'll see lower resolution textures than you should have because someone was being cheap or lazy and didn't want to do a separate asset build.
