That's a silly thing to say. First off, how on earth do you know there's no one who's using Q3 engine for their game right now? I seriously doubt all developers have sent you personal emails stating what engine they use for their current project.
As for older engines not being able to handle "cool" stuff... check out http://www.thewitcher.com/witcher.asp -- this is being done with Bioware's Aurora engine as the base but i seriously doubt anyone would be able to tell that on their own from the visuals alone. Aurora engine was on this very forum deemed "useless" by some people who were wailing how brand new game engine is the only way to go.
At the end of the day the 'cool stuff like hoods' are just textured polygons with optional animation. Now i might be wrong, but KotOR engine is certainly capable of displaying animated, textured polygons. And if i remember right, they didn't make it in the game mostly due to *hardware* limitations, i.e. there's only that many textured polygons you can display on the Xbox if you want to keep framerates acceptable for a console title...