Well, if you define indie has a few guys doing a game in their basement, of course they can't have all those graphical eye candies, the technology is incredibly expensive, not to mention you need a lot of people to code and make it all work together. It would require an indie team tremendous amounts of capital (we're talking millions here) to build an AAA title at even decent graphical quality from scratch, and that's just virtually impossible for them. They can take existing tech and build up on it (off the top of my head you have mods like Nerhim for Oblivion that could very well have been sold as a fully priced game), but only when the people who made the tech allow it. And even then, you need to publicize the game, which is even more money especially in today's competitive market (people need to know your game is not generic random crap #1384859).
So no, it's not feasible for anybody but an established studio to build a game on modern hardware. There's a reason almost every single good-sized development house is owned by a large publisher.
Still, I don't believe a second we're ''fucked''. FPS's dominate the market, so what, there always were a specific genre dominating the market, I wasn't there but I am certain the ''glory days'' had more than their share of piss-poor shovelware (admitedly maybe not to the extent of today). Doesn't mean they don't produce good games these days. If I was to make a top 5 of my all time favourites, two or three would be from after 2006.