AnandTech got their hands on an Unreal Engine 3 tech demo that works on iPod Touches and iPhones. Holy crap! The playable demo has players moving and looking by using virtual thumbsticks on the screen and tapping the screen to shoot. Epic is working on multiple control schemes including the use of the tilt function.
The simple game of Unreal uses OpenGL ES 2.0 so it can only work with the latest iPhones and Touches. Epic doesn’t have any plans to jump into the iPhone game market as of now, but they are planning on at least licensing the engine.
If this takes off, then this is going to be a huge game changer for the handheld market.