Why not GTA3? Give me a team and the physics lib. Don't see anything technically unachievable in GTA3. Look at Future Tactics. That uses the Renderware which is the same platform GTA is built on. Future Tactics was completely prototyped in Blitz and then ported. I'd imagine with the right team GTA could be done from a technical stand point.
I doubt it, blitz doesn't offer any threaded streaming of meshes, which gta3 uses heavily.(You can noitce it with a dirty/scratched disc. parts of the city are white/missing as they're still streaming in slower than normal)
Take metal gear solid 2. Even the native pc version wrote in C++, for high end gpu's only, runs like a dog on most setups from what I've heard. And no blitz game come has even come remotely close to that level of fx/ai/what not(Technical term) going on in real. (That I've seen, I've love to be proven wrong :) )