The engine can do whatever, but it's kind of a question of scale. If we wanted to have a single character with literally 5,000 frames of animation the engine could handle that easily on a midrange computer. But if we wanted to have 140+ characters/enemies with 5,000 frames, no way. That couldn't all be loaded into RAM at once with any speed, and the disk space requirements (as well as the cost of creating the assets, of course) would be horrendous. As it stands, the game has in the neighborhood of 10,000 individual animation frames if you count all the particle effects, monsters, characters, and so on.
Anyway, yeah; we're okay financially, and this is frankly a business where the costs are up-front and the rewards come later -- or not at all, depending on the success of the game in question. Mainly what hangs in the balance with Valley 2 is the future employment of a good chunk of the Arcen staff, because I'm already stretched to the limit financially to get where we are. In addition to the debt I've so far sold $25k of stock this year (holdings I had in other companies, I mean; I'm still the sole owner of Arcen), and my personal income for the year so far is thus about -$40k.
I'm super cheerful about where we are and what we've accomplished, though. I mention the above not to be alarmist or anything remotely thus, but if anyone hints that we might not have put everything we had into this, I'm going to have to do some primal screams into a pillow.
It was the same with Valley 1; we wound up driving to -$6k with the creation of that game. Actually, I'm still out more than $100k from having made that first Valley game, but made the sequel anyway because I believe in it.