We recently featured another air race kind of game, but this on has much more eye-candy:
And believe it or not, but it is made with Blender3d 2.49b's game engine (update to 2.5/2.6 planned at some point)! Another video with a nice terrain you can find here (beware crappy sound). And an in-game track editor is under development too!
You can have a look at the development of it and download some old versions of the .blend over at the Blender artists thread. But don't expect visuals like above, as the awesome Blender artist Martinsh just recently started to overhaul the graphics like that.
So where is the catch? Well licensing is a bit unclear... in a recent BlenderNation news posts the main developer stated: "This air-race related project is a non-commercial open -source freeware and source .blend file will be released for common good", but I am not sure in how far this will extend to the new art assets, and a clearer commitment to a Creative Commons license and an actual release of the source .blend would make me feel more confident about the licensing status ;)
But hey... at least I assume it was completely done with FOSS software (e.g. Blender3D)!