The paper presents a model for computing rate-dependent effective capillary pressure and relative permeabilities for two-phase flow, in 2 and 3 space-dimensions. The model is based on solving the equations for immiscible two-phase flow at steady-state, accounting for viscous and capillary forces, at a given external pressure drop. The computational performance of the steady-state model and its accuracy is evaluated through comparison with a commercial simulator ECLIPSE. The properties of the rate-dependent effective relative permeabilities are studied by way of computations using the developed steady-state model. Examples presented show the dependence of the effective relative permeabilities and capillary pressures, which incorporate the effects of fine scale wettability heterogeneity, on the external pressure drop, and thereby on the dimensionless macro-scale capillary number. The effective relative permeabilities converge towards the viscous limit functions as the capillary number tends to infinity. Special cases, when the effective relative permeabilities are rate-invariant, are also studied. The applicability of the steady-state upscaling algorithm in dynamic displacement situations is validated by comparing fine-gridded simulations in heterogeneous reservoirs against their homogenized counterparts. It is concluded that the steady-state upscaling method is able to accurately predict the dynamic behavior of a heterogeneous reservoir, including small scale heterogeneities in both the absolute permeability and the wettability.