There are various opensource game engines which are equal if not better than quake and unreal, few of them are
http://www.ogre3d.org/
www.crystalspace3d.org/
http://sourceforge.net/projects/cube/
And many others, although there are not much free games available but there are few commercial games available using these engines. The thing that seperates making an completely free and good quality game is that game programming is inherently much complex than most of the software programming and it takes lots of time to complete a single game (few years). Until a game is running perfectly you wont find an audience for it, sustaining motivation for that long is the big hinderance.
However there are many free and commercial game available for linux you can have a look at them here.
http://www.happypenguin.org/
Read a post at osnews having direct answers to your questions.
http://www.osnews.com/story.php?news_id=8146