It's not necessarily the engine's fault; psatkha mentioned somewhere that the graphics were downgraded in terms of capabilities so that the game would run even on the "calculators" of that time. If you compare the graphics in the alpha and the final version, the difference is only that the map became three-dimensional and the shadows became worse.
There's a lot of interesting stuff with the graphics in general. For example, you can find many more graphics settings in the console commands than there are among the default ones, but I don't think there's anything applicable to the material parameters.