Originally Posted by Waffles
with valve in ATI's pocket why would they add SM3 support
Why? Because valve better has to add SM3.0 support to their source engine if they want to licence the engine to others. You have to keep up with any technology progress to be able to compete. Not offering SM3.0 means you are limiting yourself and Gabe won't make that mistake. They will keep quite about SM3.0 until HL2 has shipped but then they have officially announce it to stay competitive.
The Cryengine has SM3.0 support and all the nice shaders of HL2, I currently don't see any reason why a developper would choose the source engine over the Cryengine if the source engine had no SM3.0 support (which it has). Having SM3.0 support is now equal to getting big money or not.
This FarCry 1.2 patch now really does prove that SM3.0 is more than just a tool for developpers but can also increase performance and there is still more to come.