That logic holds up because Source was a rival to Unreal Engine 2 (not UE3). Unreal 3 is not an incremental upgrade to it's predecessor. When you step back and take a look at some of the last UE2 games, discounting Bioshock which is a special case, they're barely comparable in terms of visual fidelity to first few UE3…
While it's true that a lot of the artist frontend stuff, physics and the renderer were hugely overhauled, a lot of the behind the scenes stuff that handles the actual gameplay is ancient and unbelievably buggy. Unrealscript has not been overhauled. It's been extended and bolted onto but it still has the same parsing bugs…
I highly disagree. The Source Engine is a nightmare to work with even when you know what you're doing. It's also near impossible to do a large outdoor map with Source without taking shortcuts. And you can forget large sandbox levels. Portal, L4D, and HL2 all rely heavily on stages that fold inwards on each other. When it…
UnrealScript is completely optional, it's just a script layer on top of C++ code. It's generally used for gameplay code that doesn't need to be exceptionally quick, and it's the best place to store data structures / values since it offers very short iteration times; building a large unrealscript package takes around 30…