I'm getting a little sick of the UE3. Someone start whoring out the COD4 engine.
The engine powering CoD4 has FAR more limitations. It's basically a highly (very highly) modified version of the old Quake 3 Arena engine. The capabilities of UE3 far outstrip what you could achieve with the CoD4 base.
If a developer was unable to put UE3 to use, they'd end up doing even less with the CoD4 engine. Have you tried Quantum of Solace yet (the demo)? Very unimpressive on the PC. Doesn't even begin to compare to Gears of War visually. There are plenty of lovely UE3 games out there. The fact that you've licensed an engine doesn't mean your game can match AAA titles visually.