Inferior in what sense? Genie 3 is addressing a fundamentally different problem to a physics sim or procgen: building a good-enough (and broad-enough) model of the real world to train agents that act in the real world. Sims are insufficient for that purpose, hence the "sim2real" gap that has stymied robotics development for years.
Genie 3 is inferior in the sense you just described: the sim2real gap would be greater, because it's a less accurate model of the aspects of the world that are relevant to robotics.
