Cry Engine 3, and I am not sure "Killzone2" use it?
Killzone 2 had it turned off in the release version, was a shader as well, which, even after being tweaked the hell out of it, turned out to be too slow.
The faked AO was just clever lightmapping done with the Turtle engine. (they made a new render engine now, Beast, used in Unity3.0)
http://www.illuminatelabs.com/