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Brawl already has Havok physics (Galaxy doesn't) but it uses an entirely different graphics engine from Galaxy.

I've heard that Nintendo updated the SDK with what they learned on SMG, but I haven't checked it myself. Nintendo's business model is different to those like Epic. Nintendo develops their engines with only their own developers and games in mind. Epic makes games as a showcase for their engines, therefore they develop the engine with lot of support and flexibility.