The peeps at Gayspy were given a chance to take Valve's latest baby for a spin and have posted their 3 page report, which includes the first look at live gameplay!

Last week, we presented our massive Half-Life 2 preview, based on a trip to Valve Software during which we saw roughly a dozen short demonstrations of the company's new Source engine in action. This week at E3, in a theater at the ATI booth, Valve Managing Director Gabe Newell took us another tour, showing us a (mostly) new series of roughly a dozen demos, as well as a very brief look at the game being played live in front of us.

To open, Newell gave the group a short primer on the new engine and its strengths. "The Source engine gives up capabilities in four main areas:

1) believable and realistic human beings;

2) graphics that were previously only possible in a Hollywood movie studio;

3) integrated materials and physics systems that create an unprecedented level of interactivity; and

4) artificial intelligence that welds these characters, these effects and this world into an experience that gamers have never had before.

Half-Life 2: In Action