As it turns out, Valve offered up the development tools to UE3 developers (via Epic) without charging a single penny. That said, this isn't just a philanthropic gesture on Epic's part, but rather a strategy aimed at targeting the large stable of games powered by Unreal Engine. "Epic's technology is one of the most widely used engines in the industry and has powered many of the best games created in the past 10 years, on multiple platforms," Valve prez Gabe Newell proclaims.
That's really the crux of it -- bring in the Unreal Engine 3 users and they might stick around to purchase some other games on Steam. It's a bit of a sneaky trap (and a smart business move to boot), but it's one we wouldn't exactly be upset about falling for.