Hi Tut: The raycasting engine used by ZuneHack was running fast enough for free movement before I constricted it to a tile based system. You could use the raycasting, map and camera classes from that to use as a base for a 3d game.
With some carefull optimization there could be many enemies on a map using tricks like not updating them on every update or on the same update and not updating / drawing things that aren't close or visible to you in the game world.
I think rendered images would take a long time. I've been using blender for 5 years now, and making that many images/renders would take forever. I think it's a good idea to go with raytracing. I don't know much about it, I can program a little in C#, mainly just python, so I'm afraid I won't be much help. I'm a decent low-poly texture artist though. I can make a couple of them for you once/if you get to that stage.
Maybe instead of creating a whole entire new game, we could work on the old game Project X. It looked like whoever made it got a lot done. The only problem he had was it took up too much memory. We could tweak a few things and make it use less memory and work on the zune. It'd be zune's first fps.
