They've demo'd it. There's no porting. The translation from PC/Sandbox to PS3/xBox360 can be done in realtime, meaning they've shown the sandbox editor on a PC with an xbox360 AND a pS3 hooked up to it at the same time, and people could jump into the map with either platform, all while someone on the PC in the editor is moving stuff around.
It just works. Basically, the engine simply filters out graphical routines (shading, lighting, etc) that a platform can't handle well, and compresses textures when memory is an issue.
For consoles, it will just be like playing the game on low/medium settings.
Once Crysis 2 hits and developers see how powerful this is, Crytek is going to license the shit out of this engine and overtake the market. Nobody else has this tech. Why spend all your time building a game for one platform, then have to spend millions porting it to other platforms? Time is money. Just develop the damn game on SandBox, and you get instant accessibility to all three major platforms.
CryEngine3 even supports Natal, 3D, and stereoscopic imaging. It's the god damn shit, and it is going to change gaming. Unless you've been following progress for the past few years and have a broad view of all thats going on with Crytek, you wouldn't realize it.