As much as I like UE3, yet I am not a big fan of it. I can tell you that, in fact, Gears of War is -along with Forza 2, Halo 3, Alone in the Dark, etc- one of my favourite games and I am perfectly happy with it, but apart from that wonderful GoW, being it's the first UE3 game and all, the engine is full of some reproductivally inadvisable features. If nothing changes Epic will reproduce them quite a lot.Considering how common UE3 looks to be on 360, I really think Epic should have gone out of its way to get MSAA to work fully on the hardware. It's an extremely important feature for image quality, and so much of the 360's GPU is built around MSAA support. To just throw that away... HMMM.
Alright, so occlusion techniques don't work well with MSAA according to Epic. Worst-case scenario, if another technique can't be found: just brute-force it then! Xenos has tons of fillrate. Some guy at Rare stated that Kameo's engine drew multiple copies of hundreds, if not thousands of on-screen guys by mistake with no drop in framerate. Let the hardware take it on the chin if neccessary so that we can have our MSAA.
Taking into account what you stated about the amount of future UE3 games, imho, I truly hope Epic is looking into it.