yup. Though if the content you make is good though, management usually finds a way to keep it in if it had to be cut for other reasons than quality. Most stuff that gets cut is just because it isnt of high enough quality, has bad uvs or vertexcount etc.
The engine update that came with Episode 1 has loads of new stuff, including spec maps, gloss maps, fresnel effects and "texturewarp" textures (that influence the colour of shadows). All of this is associated with the new phong shader, which is a part of the VertexLitGeneric material type. The old environment map options…
well totally depends on what you are heading too, valkyria chronicles hast some pre hatched textures that combine quite good with the post effect hatching in the shadows, you can do both parts in unreal3, well not in ut3 as you (or at leats i know no way how to) can#t touch the shadows exclusively, but you could hatch dark…