With C4 we currently have a purple human shaped blob that can run, crouch and lean

We have a couple of ginourmous test maps, but they keep crashing on my machine hehe. And a crude ballistics simulation. And one guy sorta associated with PR2 is working on a T34 Tank simulation that we hopefully can share some stuff with him and learn about how to do tracked vechiles. And we've integrated some 3rd party tools into the C4 engine, just as a learning process. We're in the process of getting our SVN repository, project management tools and Wiki and such set up amongst the PR2 crew. There are guys working on specific aspects of the design, as well as collecting some reference data and several broad design topic discussion with the entire PR1 team.
We'd hope to have some sort of proof that we're actually doing something (a playable alpha) before the PR1 community dissipates. That's about the only "schedule imperative" we're working against. I think that is 12 to 36 months before PR1 starts to decline (it's still growing). And in 4 years if people hear of a PR2 game and they remember liking PR1, they might be compelled to buy it / try it (we're still not sure of the business model, but it will have a commercial aspect to it).
Someone mentioned the C4 billboard system. Hehe that's not referring to "advertising" billboards. That's in reference to the 3D engine's capability to turn 3D objects that are far away into 2D "billboards" to be more efficient (this is good for us because it is an aspect of enablingling long view distances and high numbers of rendered objects).
If we decided to do some sort of in game product placement / advertising (and we might) we'd need to integrate the tools from an in game advertising provider. But we're gamers too heh and some of that stuf is real shite.
The C4 engine may not be the best choice. But I sincerely believe it is the best choice of Indie priced engines. And Eric Lengyel, the sole coder of the C4 egine, is an extremely bright guy who offers tremendous support. I like supporting guys like that.
The engine isn't even complete yet, but people are shipping product on it. And some people are attempting some incredibly ambitous projects on it. The next release will add a physics engine and some terrain engine optomisations for large terrain rendering. His goal is to allow for unlimited terrain without loading screens. There are some pretty major chunks missing from the engine, but the core foundation is there and the roadmap is pretty solid in terms of rounding out the engine's feature sets. I expect it's mid 2010 before C4 could be considered truly "complete". Hopefully sometime shortly thereafter we can have some basic elements of PR2 in place and toss out a playable alpha to get some community feedback involved.
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