If FF was started today, I think the best engine choices would be....
Orange box (which is not the same as source engine) or Unreal Engine 3. UE3 is an amazing looking engine, and the UE3 makers have recently did something that was very cool.
You can make a full stand alone game for free, or even charge for it, but if you charge for it you have to buy a $99 license from them.
http://planetunreal.gamespy.com/fullstory.php?id=160621