In a recent interview with Joystiq the Vice President of Epic, Mark Rein, makes it clear that PS3 mods for Unreal Tournament 3 will have no limits. "Anything that can put into a level" can be included. ""Level" is a little deceiving now because, with the streaming system that we have, a level isn't just one map anymore. But anything you can put in there, which includes maps, models, Unreal Kismet scripts, Unreal Script, textures, shaders, matinee instructions." So total conversion mods will easily be possible, when utilizing all those tools.
Rein summed it all up by saying that "Anything that we can do, you can do." Sounds good to us. Check out the full interview at Joystiq.