Nothing was wrong with Quake 3. I played q3test and I purchased the game shortly after it was released. I never got into vanilla Q3, but I played and enjoyed several mods: Urban Terror, True Combat, and Western Quake 3.

I mentioned Q3 because I wouldn't expect a game that was released in 2005 (Lugaru) to look worse than one that came out in 1999 (Q3). I typically don't want to play 3D games with worse graphics than Q3-era tech unless they're particularly noteworthy (e.g. Drakan -- given a choice between a sword-wielding, dragon-riding girl and a bunny with a stick, which one would you choose? ). And Q3 [mods] can still look very nice with trilinear filtering, 16x AF, FSAA, etc.