Well gosh if Id's employees say the D3 engine rocks then by all means, it must be true
A good software must be scalable, meaning that it can run today pretty well, and tomorrow even better, with added features etc.
Problem with D3 is that I wouldn't define it as running well today, it doesn't run like crap either but I just wasn't impressed.
HL2 graphics wont be as good (arguably) as D3's, but I believe it will be a much better game.
As for farcry, I definitly enjoy CS:Source graphics better than Farcry's, I'm not sayingt they're better, only saying I preffer source's.
As far as the D3's engine capabilities for vehicles open areas etc, I was hoping they'd use it more in Quake4 , but from the preview it almost looked like D3 all over again, I sure hope I'm wrong