I have to disagree with your comment on Epic's games. Yes they have had a few slips - Unreal Tournament 2003 comes to mind but they have several VERY high quality games under their belt - The origional Unreal, Unreal Tournament and Unreal Tournament 2004 are all classic games with fantastic replayability. As far as general Multiplayer modes based on Deathmatch go, they have the best games available. None of the deathmatch modes for other games such as Half-Life or Half-Life 2 come close to UT2004s Deathmatch. While Quake III's deathmatch mode was better than UT99s deathmatch mode, UT excelled at other modes such as CTF and Domination.

Unreal Engine 3 is simply taking advantage of the huge leap in graphics technology that came about with the launch of the latest generation of graphics cards. The engine isn't even coming out for another 2 years at least anyway

I'm really not impressed by these screens, and with each new iteration of FPS engines I'm less and less pleased. When are people going to decide that graphics aren't everything and start focusing on other aspects of FPS design such as AI? From my limited knowledge I can guess that the three biggest recent visual innovations have been real curves (Q3), dynamic shadows (D3), and reflective and bump mapped surfaces (D3, HL2). None of these are particularly impressive and once you move beyond the wow factor what are you left with? I'd be much happier if next-gen games did more than just up the model detail and improve upon those three things already mentioned.

How about weather modeling, where during a map the weather can go from sunny to rainy to cloudy with the appropriate visual changes? Or maybe realistic and adaptive AI that presents a real challenge? How about AI that learns and adapts to your actions and eliminates your main strategy, forcing you to change tactics? Or one that can correctly manipulate the environment (open closed doors, create and destroy barriers)? Or perhaps developers could avoid going for extreme high end detail and focused instead on tons and tons of content? Maybe they could have dynamic levels, dynamic storylines, or even dynamic battles going on around you?

I was glad that HL2 went in different directions in their innovations away from pure graphical power (tons of physics and realistic facial animation) but there's still plenty of stuff that could be done outside of the realm of pure visuals.