Looking at this made me think - Quake II had 3D explosions, but they looked rubbish because they were so low poly. People could make better looking explosions with sprites, so they continued to do so. In that Unreal demo the explosion was specifically only designed to be viewed from one angle, when they showed it from the side it looked *rubbish*. Sure, he did say they could take more layers to increase the side quality, but it would still be interpolated data. If the explosion radiated out from a central point would it be possible to rotate it to always face the player, but in that case what if you want an explosion pouring out from a specific component blowing? In a multiplayer environment does everyone see the same explosion from a different angle, or do they all see a 'personal' explosions facing them? Also that video might be a next gen gameplay but even if I go back and look at the features advertised from Unreal Engine 3 tech demos and then look at games made using it the tech demos of course look *much* nicer.
I've looked at a few Youtube videos of explosions in Unreal Engine 3, Cryengine 3, the Arma III engine plus a few others, and to be honest the explosions in all of those still look sprite based. Several semitransparent sprites layered and moving outwards towards the player, to give more of an illusion of depth, but still sprites. And in each case the players was standing still or at least not moving very fast relative to the explosion. I don't know how it would look if they moved suddenly round the explosion. Does it rotate too, to keep the sprite(s) facing them, or does it display the 'side/layers' of the sprites, or what? All options I can think of that aren't full 3D explosions would look pretty rubbish, but I am not a game engine programmer and if noone seems to be doing full 3D explosions yet I am assuming there is a valid reason for it.
The best I've ever seen are in Haegmonia Legions of Iron - a game that's over a decade old now.
They're a very clever combo of semi-transparent sprites over-laid on 3D particle effects and heavy use of debris in a mixture of 2D and 3D formats. Looks very good from every angle as you rotate the camera. It's not perfect, but it's really very convincing and you have to be looking hard to work out the trick.
Check it out here.