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Cool, but it wont take off. The Unreal Engines main drawing power is the tools it comes with. They are by far considered the easiet to work with, and that is also why the Unreal games have such strong modding communities.
One thing it does have going for it though is that its probably much cheaper than either Unreal Engine 3.0 or the Doom 3 engine.
One thing you should think about also is that Epic is actually already at work on Unreal Engine 4.0, lol. They simply have to much main power over the other big engines out there, even over ID, to be behind.
I think its a nice alternative for sure, and it could mean that graphics overall will update much quicker this time around with a budget engine that is able to push out amazing visuals.
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