@Rld: If i "misunderstood" you correctly, you may have just given me a great advice. Is this what you mean:
Rather than try to modify torque engine which will require that i read all the code and could possibly take forever, I should make an entire game engine which will not only be easier than modifying torque but i can make it as simple as i wan't to and to suit my needs,i.e. i should use a render engine such as ogre 3d as a base which would solve the rendering part of the game engine.
That's exactly what I meant. Don't get me wrong, doing this will not save you time and it will still take you (or any other person) a long time before you get to the point where you want. It could even take more time, but the way I see it, because you're building it piece by piece, there is less chance of breaking an entire game engine because you changed a dependency (note that I don't know the Torque engine by heart).
It will still take a long time, it doesn't mean you can get stuff to work any faster than modifying an existing engine, it might work out better due to not being able to break an existing engine (other than not using it correctly or if you're planning on modifying ogre as well). The only real advantage for you is that it can reduce the amount of headache it can possibly cause by breaking the engine when it comes to production.
Both have their advantages and disadvantages, I will leave it up to yourself to decide what you like the most (although it seems you already did). Ogre3D is the one with the most features though.
I have worked with Ogre3D several times in the past and it has a great deal of features that can serve your need. The SDK comes with a sample browser that you can run and see some of the features it has. Next to what Ogre brings natively, the community has build a lot of nice stuff that can help you, just browse through the forum and you'll see some stuff passing by.
Finally, if i was correct then this photo becomes extremely important as it will act as a blueprint, right?
That imagine could serve as a reference, yes. Doesn't mean you need it all (or be able to build it all). If I am not mistaken, that's the image from the Game Engine Architecture book and that image represents the (by then) engine they use at Naughty Dog, I hope this gives you a good indication of how big and complex a game engine will be (let alone the complexity of the game itself).
World Size supported by engine:
1. 6km x 6km - 10km x 10km or more
1. For open world- NONE
2. For Levels: Maybe
I don't know if Ogre will help you with large open worlds without loading screens, this is probably a question you can get a more proper answer to on the Ogre forums. I know it has support for scene management for open worlds, but I don't know the details about it.
1. Ogre 3d ( please tell me ogre 3d takes care of these - dynamic shadows, particles, subsurface scattering etc.)
Shadows, particles. Yes.
Subsurface scattering. Probably not out of the box. Perhaps someone of the community has made it.
It will be a 3d game engine. It will need tons of c++ programming right?
Yes, every point you listed is something you either have to build yourself, or when you're using a library (like PhysX) interact with. So just the game engine itself will take you a long time to finish.
Word of advice:
Try making a small (prototype) game in an existing game engine (whichever you like) to just get a taste of what's to come. A friend of mine is doing exactly what you are doing now (except he wanted to make a MMORPG), but settled with an existing engine (hero engine). After a year of on and off work, he finally gave in to my advice to first build up some experience before taking on such a heavy task.
Nonetheless, I wish you all the luck and hope it's a great learning experience for you, whichever path you may take.