I've seen Unreal Engine 3 running on an iPhone. Epic Games has proven it's possible, albeit only on a 3GS. I've watched Epic Games VP Mark Rein play a version of Unreal Tournament on his Apple device. When Epic Games builds their engine on a platform, it usually means they're working on a game for that platform, too. With the iPhone, however, that's not actually the case.
"It's very skunkworks for us right now," said Mike Capps, president of Epic Games, during an interview with me at DICE 2010. "We don't have a game we're building on it. Generally, when we support a platform with the engine, we know the platform back and forth because we're shipping a game there. Since we don't have Unreal Tournament for iPhone in development or anything, we haven't really figured out how the product ties in."
The motivation behind developing Unreal Engine 3 on the iPhone is a response to major publishers -- publishers who are already using Epic Games' technology for other products -- embracing iPhone games. Epic Games wants them to use their iPhone technology.
"What I want," explained Capps, "is for the EAs [Electronic Arts] of the world who are licensing our tech for a ton of products anyway to say 'Gosh, I could start using my assets for you-name-Unreal-Engine-game-here, I could start making an iPhone game with the same tech instead as opposed to having to write something from the ground up.'"
Of course, I wouldn't mind an iPhone version of Unreal Tournament, either.
For more from DICE 2010, check out our official page for continued coverage.