I'd suggest looking into the Ogre rendering system
http://www.ogre3d.org It's an open source engine with alot of support and alot of great features. The only downside is that it's just a rendering system but many people have been successful as integrating ODE(Open Dynamics Engine) into it, which is a pretty nice physics system capable of alot of different things including great looking vehicle dynamics. It's got quite a few different scene managers such as BSP, Octree, and several other terrain managers. Overall it appears to be a great system thats very easily set up, and in the next week or so the new release will support hardware shaders.
If you guys are truely interested in doing your own system it is definately a system to take a look at.