I don't know if the flaws we see in the game is due to the Engine limitation.
But, if I have to make a polite guess, I would say that the people responsible for the animations, gameplay design and quest developer are to blame. I'll explain why:
I) Gameplay animators are to blame because the game don't have basic animations, like:
a) Opening/closing the door in some cars (the low resources cars);
b) Using items (drinking/eating);
c) Catch and pet V's own cat in Apartment - which is not possible;
d) Sleeping in V's bed is obviously flawed;
d) There's no much variety of NPCs behavior to what players do;
e) Running animations are very clunky - NPCs change direction like in PES for Nintendo;
f) When V is very close to NPCs, most of them don't react, they don't complain, ask for V to back off, or show any kind of corporal behavior that clearly shows that they are uncomfortable;
g) In the other hand, some members from police and gang members react in a very agressive way, if V is near them;
h) Most vendors doesn't have any animation to show that they are working;
i) Transition between gameplay and scripted animations are very noticeable, it's like they didn't even try to make it more immersive (like in GOW - as an example);
j) Dropping the barrels that have the flame on top of them, while the flames keep floating in the air is another mistake;
II) Gameplay Designers are to blame because the game doesn't seem to care about the player experience:
a) You can go to Dance Clubs and dance, but there's no reason to do that, you don't get famous because of your style, as an example;
b) You can't greet, antagonize and maintain any kind of interaction with most people, the game doesn't even try to be immersive in this area;
c) Talking to the bartender/vendors makes them open the menu, instead of having proper animation and gameplay effect (if you eat something in a restaurant, V could have a bonus effect), and the items they sell are usually very generic and uninteresting;
d) Having multiple brands for drinks/food/alchool without any difference in gameplay effect was clearly a mistake. Putting all those together in the same consumable menu was another mistake - just creates visual polution;
e) Forcing the player to sit to watch TV on his own house, not using drinking and eating animations in restaurants and bars were clearly bad gameplay limitation choices;
f) To let the player sit only in scripted places is another absurd mistake;
g) Crafting waiting bar is trapping the player on the menu, instead of experience the world;
h) If V starts to jump around, run, change weapon or have some crazy behavior, it would be natural for the NPC to react with some "What are you doing?" or "Are you crazy?". But in the game, they do nothing - same goes for nudity (nobody cares);
i) The balance between weapons are very bad. There's no compensation between an Igla and a M2038 tactitian, so the last one is basically useless, even if it is a higher quality tier;
j) How combat work is very strange. You can trample the battlefield with legendary items (sword, pistols and assault rifle), even neglecting the reflexes upgrade. As upgrading the player and having better items overlays each other, doing it breaks the game and makes the player one shot everything (which is a problem in VH difficulty);
k) Gang reaction to V are very mild, compared to what should be: You can kill all Tyger Claws in some area, but this won't change anything when you negotiate with them further in the game, and so on for the other gangs;
III) The quest designers are to blame because despite doing a great job on the main quest:
a) A lot of secondary quests are grindy, and unlinked to world effect. The exceptions are the friends/romance quests and a few secondary that can have some effect;
b) Most choices doesn't have any consequence;
c) Most quests are linked with fixers, so the client has no personal connection with V;
d) NCPD quests are grindy and doesn't change anything;
e) Buying used cars being a series of quests is just a bad joke;
f) TW3 was praised because the secondary missions were very good, and that happened because Geralt always heard the client personal problem, negotiate with them, had to investigate what kind of enemy he would be facing, and the enemies were different from each other - so they had their own strenght and weakesses.
g) That TW3 variety made the missions less grindy, but in CP 2077 they just scrapped that. They killed their greatest gameplay triumph that made the secondary quests actually good and that's why they don't feel unique anymore.
h) In Cyberpunk 2077, the formula is always: i) Fixer calls, tell there is this job, and ask the player to read teh text; ii) The text with photo actually explains what needs to be done, which is always: robbery/assassination/rescuing; iii) V goes to the place, silently or guns blazing - sometimes fixer pays more if the job is done silently; iv) The player faces the same enemies; v) Job is completed and the cycle repeats itself. There are 3 or 4 fixer missions that, when completed, leads to some continuation.
i) Rewards system is, for the most part, frustrating. If you fail some mission, the fixer still hires you for other jobs.
These are the problems that, IMO, hinders the experience, and as I stated in the first line, I don't know if they can be credited to Red Engine 4 limitations.