The Source engine even to this day is very nice. Valve still uses it for a reason.
I cannot wait to see what kind of graphical achievements this new engine will cause.
I have always adored the Source engine. It feels fantastic, I love the simplicity and beauty about it. I have always felt other overly polished games with fantastic graphics feel very hacky. It all depends upon the art style, however. Let's take skyrim for example. It has very nice, and simplistic graphics, and it feels fairly moddable. On the other hand, we have games like Battlefield 3, for instance. Its advanced graphics style makes it hard to imagine mods accompanying the game.