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Hey I'm not too thrilled about saving it as a JPEG either, but this is indeed a playable Sonic Fan game running in real time on this computer. It's the talk of the town at the moment - a fangame designed by Sonic Retro users pelikan13 and Mercury which, even if you're not a massive fan of the strange art styles employed here, completely wipes the floor with Sonic the Hedgehog 4.
Built with the Unity 3D engine, Sonic Fan Remix is a three level demo which surprisingly still looks great on slightly under-powered hardware. Things to note are an almost perfect physics engine and of course all those neat graphical effects. I can't say I agree with all the graphical and audio choices, but it's certainly the most impressive Sonic fan game I've ever seen... don't know about you.
The topic of discussion can be found
here, though do note that thanks to the likes of Kotaku a lot of download mirrors have died hosting this thing. Nevertheless, fantastic stuff and certainly worth your while.