It could definitely handle it, just not with all the settings cranked. You'd probably be looking at medium to high settings for most aspects, so it would look very good, just not as good as it would if you were running two 8800 GTS cards with a quad core processor.
You're probably cool to get one now. I think they have fixed most of the issues. My 360 had the RRoD and MS had my console back to me 10 days after I shipped it to them. I was pleasantly surprised at the competence of their customer service.
I got Cod4 and Assassin's Creed. CoD4 is amazing, but I haven't opened Assassin's Creed yet. I'm thinking about taking it back for Mass Effect. I keep hearing complaints that while it is a stunning visual game, the game play gets repetitious and boring. Anyone have thoughts on this?
This site has been in slow decline ever since Greg K left. This is just one more step down the ladder. I come here for opinions and screen shots anyway, my game purchases are ultimately determined by which ones I like when I rent them via GamesNFlix.