Anyone hear about the Unity and Vicious game engine? They both support the wii and Unity engine look pretty good in terms of graphics and physics.

http://en.wikipedia.org/wiki/Unity_%28game_engine%29

http://en.wikipedia.org/wiki/Vicious_Engine

Yeah. Unity uses Ageia's PhysX for physics. Some (if not all) of Havok's stuff is also available on the Wii.

Though I guess none of these are actively being offered/subsidised by Nintendo, which was the original question.

Yes I guess I went a little bit off topic but since the cost of development was mentioned, I thought I would mention cheaper alternatives to the unreal engine.

Garage Games have just announced that thier Middleware Torque engine will support the Nintendo Wii. The Torque engine has been used to create a lot of Xbox Live Arcade games such as Marble Blast etc ..
Garage games has optimimized the engine to support the Wii Mote and Nunchuck by default.
Sounds great.
Epic and Id dont really have any incentive to port their old engines to the Wii.
Epic and Id need PS3 and Xbox 360 to succeed to fuel their next gen hi def engine ambitions which offer a higher compensation from developers.

If the PSP can handle Unreal 3 engine(Rainbow Six Vegas), I think the Wii can handle it too.

Vegas for PSP used the a highly modified Unreal 2.5 engine.