Technically udk is still useful.Im using it too and although not being updated,doesnt mean it cant do great stuff.It can come close to u4 in graphics,but the problem is that you have to work more in order to achive it.In the old forums there is a huge ammount of code,ai,shaders,particle fx etc. left.And you can use photogrammetry for more realism like Ehten Carter.I did a few tests with photogrammetry in udk and its awesome.
I saw 1-2 pbr shaders for udk on polycount(although im not too sure if they are the way to go).And if you want eyecandy projects to see how to achive more,people can download the:
BathHouse scene
arbor vitae scene
http://www.helderpinto.com/udk-level-arbor-vitae/
It’s not about the graphics anymore,its the game you make.Ive been looking at games on steam for the last month and comparing relative sales on steamspy and people just dont seem to care much about graphics anymore.Its the stylle and ambiance that have more of a impact.
indiedb shows that games with udk are still made
With on top of the page 
And most big u3 games this year are
Hawken(started with udk),Outlast 2,orcs must die and probably more.So its still a capable engine.