Actually TG2 is really just the logical result of things Matt and some of his friends (Hugo Elias for example) have had in mind for *years*, ever since the original TG came out essentially. You can look back in the history of the Yahoo list and find Matt and Hugo both talking about displaced subdivision terrains and the like. Once Matt got to Digital Domain and was being paid full time to cook up some really fancy stuff he had the chance to realize a lot of those earlier ambitions. At digital domain he was able to get practical experience in a real-world effects pipeline and be surrounded by some of the brightest minds in the effects industry, so I'm sure that helped him solidify his earlier concepts. The "TGD" engine was the result, upon which TG2 as well as Digital Domain's "Engen" were both subsequently based.
I couldn't really say at what point Matt realized that overhauling or improving TG 0.9x to reach a 1.0 just wasn't going to get him where he wanted to go, but it must have been while he was at DD. After that it was a foregone conclusion that a "next generation" system would need to be developed.
- Oshyan