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Haha wow MGS4 was xsi... interesting. is this a leap by the industry away from maya/3ds max or a greater acceptance of other programs?
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MGS3 was XSI too:
"How was XSI used in the MGS3 project?
It was the main tool for modeling, character setup, and animation. XSI became the main pipeline of MGS3. "
(source)
There are quite a few non-American companies using XSI, Japanese especially (now one of the default languages for their license server). Capcom has been using it lately in titles such as RE. We're currently getting our Department of National Defense to switch over as well.
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If I am not mistaken I heard that Blur just switched to Xsi?
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They've been using it for a while now judging on how many times their work would pop up on XSIbase. They played a part in developing Softimage's Face Robot as well.
Regarding the Texture Editor, I've never had any problems with it.
As for the article, I think it was pretty informative (I like the thought of converting syflex simulation into something a game engine can use). I was a bit surprised at how they could keep the textures to 512x512 and still got a hi-res look.