I agree, there is no way a to-the-metal game engine will be written in any apart from C/C++ for a while. However, there is no reason why the higher level logic of the game ( the bit that is done by the designers/gameplay programmers ) shouldn't be done in a higher level language.

Unit testing is an excellent technique for any development environment but is sadly rare in the games industry.

Iterating on disc products is not simple :) Though a lot of metrics could be gathered for use on a sequel. During development though iterative development should be ( and often isn't ) absolutely fundamental. Trying to "create fun" is an incredibly difficult task and can only be done with plenty of feedback.