Okay, first off, the video wasn't "obviously" anything... and FMV refers to "Full Motion Video", as in, live actors shot on video, and then compressed into digital movies. The term came out as a result of streaming CD technology, that allowed video to stream "full-motion" for the first time, as opposed to single shots.
Second, your statement about LucasArts not releasing information about games until they're "pretty far along in production" doesn't make any sense. They obviously had to preview Grim WAY before it came out, I'm sure it wasn't nearly done. And they say FT2 isn't coming out til 2003!
That trailer looked like a TEASER to me.. you know, like they do with movies a year before they come out. They don't need to have everything done to create a TEASER trailer.