For the past 4-5 months I have been TA on a master degree course(4th year though, so this is not their final project) in Game Development at the IT University of Copenhagen. The students have developed 3d games in groups of 6. All groups, except for Man In The Middle, used the Unreal engine, as that was the officially supported engine for the course. Below is a few vids, the last one is from the XNA group.
The Chronicles of Steel-O Mall:
http://catalog.xna.com/GameDetails.aspx?releaseId=33
The course is a part of the Media Technology and Games degree, which has two lines: Design and Analysis and Technology. The first is about game design and the second about programming which means that the games should not be judged too much on the visuals as there were no real artists.