Image Quality and PhysX
Batman: Arkham Asylum is a title that heavily features Nvidia's PhysX API. This means that PhysX controls most of physics calculations in the game, and if you have an Nvidia graphics card, you can enjoy extra PhysX visual effects with hardware acceleration. Now, you don't need Nvidia hardware to enable these PhysX effects, but if you don't have an Nvidia card, then your experience will be something of a slideshow no mater how fast your CPU is.
There are three PhysX settings: Off, Normal, and High. The High setting enables cloth (draperies, cobwebs, and the like) that will alter or rip as you interact with it in a very realistic fashion. The High setting also enables fog that will interact with characters, causing a wake behind them as they travel through it. Paper effects are present, causing sheets of paper to move as they are walked over. There is a host of other effects involving the architecture, such as explosions, tiles that break, and walls that crumble.
On the Normal setting, the cloth movements and interactions seem to be removed. Fog and paper effects seem to remain, but others may be muted--it is hard to judge exactly.
Of course, set to Off, cloth, paper, and fog effects are disabled. Explosions and crumbling architecture are a lot less realistic.
Even with PhysX set to Off, though, there are some physics calculations going on. Batman's cape flows beautifully and seems to react extremely realistically to his movement (we're told that this isn't a PhysX-based effect but is a result of custom coding by the developer), and there is the usual toppling-barrel physics and what have you.
In short, PhysX offers a lot of eye candy and added detail. You can play the game through without PhysX enabled and you'd never know there was anything missing--the game still looks gorgeous. But if you set PhysX to High on hardware capable of making it run fast enough to enjoy, the added detail is a real treat.
Image Quality: GeForce vs. Radeon
From what we've seen, you won't notice any difference in Radeon or GeForce image quality, which is just the way we like it. Of course, without GeForce hardware, the game will run much slower when PhysX is enabled, but the visual output will remain identical.