The UT2 engine (AKA Warfare) is crap. Sure it's got nice visuals, but the sound rendering is very flawed, and the physics engine is a joke. In addition to it being overhyped, it is also underdesigned as far as the gameplay of 2k3/2k4 goes. It just seems like a marketing ploy which the selling point is "look how pretty our textures are".
The source engine, on the otherhand, looks to be a VERY promising engine. Granted it wont be as easy as the simple UnrealScript and mutator system, but the video is good, the sound is great, and the physics are absolutely stunning. There was even a working internal combustion engine made by someone.
And that is my array of fragmented thoughts for tonight!