Irrlicht Engine

https://www.youtube.com/watch?v=05EL5SumE_E

Team showing real 3d audio implemented in Q3. It sounds quite good, in ways that current APIs like OpenAL or others cannot produce.

Wow that does sound really good for sounds that the player makes, I noticed some odd things happening at the end when it showed the live multiplayer test, for example here at 2:08 http://youtu.be/05EL5SumE_E?t=2m8s when the player up on the stairwell firing the minigun runs down the staircase out of the players viewpoint the sound from the players minigun almost completely goes away. It seems like they are on the right track with the whole raytracing sound thing but it needs to go one step further with some kind of volumetric raytracing combination.

could be network code

I think this would go really well in a unified Sparse Voxel Octree pipeline (raytracing is a lot faster than against polygons)

http://www.carlschissler.com/gsound/index.php?page=home theres this one too.
maybe eax3d could be enhanced ?