For Episode 2 they're upgrading the source engine with dynamic shadows, and will have HDR lighting. I'm not sure what else they are doing though.Doom_HellKnight
Lots of other effects, plus multithreading. http://forums.steampowered.com/forums/showthread.php?p=5638300
It might not seem like it, but the Source engine is continually updated. Compare screenshots with CS:S beta and CS:S these days. As for big changes, yes, almost definitely, the engine will be updated. That's the one big advantage the Source engine has over others; it's easily adaptable and upgradable.
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