From TDN

A strong visual style such as Cel-Shading or Toon-like visuals will be able to define your game and strengthen it's visual landscape. GarageGames's Marble Blast is a prime example of these changes. For Cel Shading, or Toon-like environments, keys areas of the visual pipeline need to be very defined and specific.

Cel Shading

Engine Code Changes
Add this code to TGE in order to give it the correct rendering style.

WorldEditor Tweaks
You will need to tweak the sun, the sky and other datablocks to give your level the correct visual style.

Assets
Building your models for a Cel-Shaded style visuals requires certain changes in your normal pipeline.

Alternate Method

You may also be interested in the pre-packaged resource put together by David "RM" Michael that plugs directly into TGE 1.4.

He has two relevant resources on the subject:

Resource: Cell Shading in TGE

This method of cel shading DTS objects is based on OpenGL multi-texturing and uses a 2nd rendering pass. The resulting look, though, seems to be well worth the extra pass. And since you can limit which objects get the cel-shading (players, statics, etc) you don't have to take the 2-pass performance hit on everything.

You may also want to get the player texture used to generate the image on the right.

Resource: Shape Outlining in TGE

This resource draws outlines around shapes (DTS objects) based on the edges and faces of the object. Creating the necessary list of the edges and faces of the model is somewhat time-intensive, though, so this resource also includes a mechanism for saving and loading the edges and faces from a file.

Essential Links

Topic: cartoon outlining (cartoon rendering part1)
Stencil Shadows in TGE