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Thanks to Epic's Unreal Engine 3, iPhone / iPod Touch gaming will never be the same. The company plans to "make this available to licensees at some point in the near future," meaning we could one day see games running Unreal 3 on the iPhone." Continue reading for a video demonstration.

And since the engine will run on the 3GS only, it seems that tipping point with games we worried about, where iPhone and 3G users don't just get worse graphics, but are actually shut out of entire games, isn't so far away.