Hmm... sorry though I dont have the time as such to join your party but I will try to help as much as I can (have made a game once )
1. For a list of free game engines along with their reviews
look here
2. As far as 3D modelling tools are considered, if you have big bucks you can go for the professional tool 3ds max or Maya. A free 3d modeller is Blender and has the features which match the professional ones (though its a bit tough to learn it).
3. Level editors are also aplenty out there but sadly they require you to pay for using it. A free one is
Deled
4. Good sound libraries are:
Fmod:
http://www.fmod.org
OpenAL:
www.openal.org
5. Network API's
RakNet:
http://www.rakkarsoft.com
Zoidcom:
http://www.zoidcom.com
6. Physics Libraries:
Newton Game Dynamics:
http://www.newtondynamics.com
Novodex:
http://www.novodex.com
ODE:
http://ode.org
Tokamak:
http://www.tokamakphysics.com
As far as my experience and persoanl recommendation is concerned go with
Irrlicht
Reaons:
1. Supports a lot of file formats
2. Has a level editor and support for .NET languages.
3. Has a very active community.
4. You can start being productive in a week or so.
IF you are really up for a challenge and want to do some serious development go with
Ogre ( which is a free professional level engine ). And believe it or not , it has got a book written on it (by Apress ), so if you really serious about it, consider
buying the book.
Performance wise Irrlicht is nothing compared to Ogre but the tradeoff is the level of complexity.
The only problem methinks you will encounter in this project will be the artwork, coz programmign without good artwork sucks realtime.
Hope I was helpful here, bye.