Remember OPF2? Seen the xbox and playstation3 logo in the engine = limitations just there. Nice graphics and all, but the Crytek engine wouldn't be utterly useless for a game like arma. If you want to play on maps the size of COD, sure thing it's perfect, but arma's wast landscapes where stuff is happening all over the map realtime wouldn't be possible.
If anything, I'd rather have BI to create a whole new engine for the next, if any installment of arma.