I don't buy that argument, at least not in general.
If you're making a 3D chess game, then there are no excuses for it looking bad. No matter what engine you use, even on 512 MB devices.
If you're making a 3D game with expansive 3D landscapes with tons of texture data, then okay, you'll likely have to provide a second set of lower resolution textures (or generate them on the fly) because the higher resolution textures won't fit into memory. Obviously, the more textures you require to create that digital landscape, the more resolution you'll have to sacrifice. However, that still doesn't mean it will necessarily look bad. On small smartphone screens you can often get away with using lower resolution textures. Particularly if your scenes are constantly in motion it won't matter that much, because the human eye is very bad at picking up texture detail in moving images.
Frankly, there are a lot of other limiting factors on smartphones beyond RAM, which in terms of graphics fidelity, often play a more important role, GPU pixel fill rate being one example. That just isn't a spec you'll find on the spec sheet.
A 512MB device definitely doesn't automatically mean that a game must look bad.
The fact that some games aren't made available to 512 MB devices, has absolutely nothing to do with lag.
On a 512 MB WP8.0 device, the most RAM any app can allocate for itself is 185 MB. Android makes some sacrifices in other areas, but it can (sometimes) allow games to allocate more RAM, even on 512 MB devices. As a result, most games are designed with higher memory limits in mind than what 512 MB WP devices can offer. After having developed such a game, getting it to work within a 185 MB budget can be very time consuming. Sometimes it's just not economically feasable. Even if a game is developed on all three platforms at once, it can still make software designer's lives much easier if the hardware platforms they're targeting are at least similar. Outliers are often ignored for this reason, particularly if those hardware platforms represent only a small fraction of the market, which is exactly the situation low-end WP devices are in. It's not that it can't be done, but that their ROI calculations are better if developers target the main stream.
Just to prove that point, Spider Man Unlimited has already been illegally patched to run on 512 MB WP devices, not professionally, but it's perfectly playable. That proves this issue has nothing to do with OpenGL vs. DX optimization or anything of that sort, because the game's code itself is completely unchanged. All they did was replace textures with lower resolution alternatives.