I can't see why Spicy Horse went with the Unreal 3 engine for Grimm, they could of pulled of the same game with less complex and far cheaper engines with the added bonus of running on practically any PC out there. Look at Gravity Bone, that's using the Q2 engine.
as has been mentioned in the other baking threads: What is your final output target? Is it max or a game engine? If its max, then bake in max. If its a game engine, then see how it looks in engine first, then see if you need to change things.
Theres not really much in it hardware wise, so you should be OK - however I would advise building this directly in the Unity iPhone engine, not the Unity engine, otherwise you will in for a serious shock. (lots of Unity functions are simply not available between the engines)
So before applying the material in to the mesh in engine it looks good? Interesting. Perhaps you could share the assets, so the situation can be reproduced.
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The Pixel Processor get some nice optimizations on the Directx 10 engine (OpenGl engine on mac will come later). So this perf boost will only be available within SD as Unity/Unreal uses the CPU engine. You can expect this kind of performances on very complex functions:
Unity use the Substance Engine 5 currently. Changing the engine compatibility in your settings will only highlight incompatible nodes in your graph, it will not affect the cooking of your substance (sbsar). You will have to check manually your graph for nodes and property that don't exist in the v5 of the engine.