Yes, other JRPGs are vastly more vibrant (I assume, atleast, I havent played LO yet) due, primarily, to art stylings and such. My main focus was "can LO do it?" reffering to actual....diversity in color pallets vs. what Gears, and other dark UE3 games have.
As for the question about why Square is using UE3 instead of the White Engine:
The White Engine, as far as I know, isn't done yet - no game has actually launched on the White Engine, despite Square working on this proprietary engine for years, at some insane cost.
So since it's not out yet, Square needed a next-gen engine for a quickie JRPG. Rather than trudge through hand-making a one-off engine for yet another game (when Crystal Tools/White Engine is coming soon), they bought, and love, UE3.
Back from the dead, I'm afraid.
