I'm interested in rather detailed (and still high-speed) world simulation. I still don't know all what's out there to handle things for me. I have been learning Bullet Physics. What I'll want someday, and what I'm not sure Bullet provides is fluid simulation. I want air and water.
Seems like the most straightforward way to do this is to simulate particles. Reminds me of smoothed particle hydrodynamics models that I worked with a bit at LANL many years ago. Seems like if you represent matter as particles, and those particles have properties to represent how they bond with each other based on proximity and whatnot, then you can get water and air resistance and so on.
If bonds can be more or less rigid, and if you prebond some particles, you can make rigid bodies, too. 8 particles with strong, rigid bonds and zero radius could make a box. 2 particles with positive radii could make a capsule. Strong yet flexible bonds make soft bodies, like what Bullet provides. But if the bonds are still breakable (and don't easily reform), seems like you could simulate awesomeness like breaking objects into pieces or otherwise damaging them.
Sauerbraten's ragdoll physics system seems related, too.
Oh, and of course there's also a relation to finite element analysis.
The question is if you could optimize dynamic resolution and certain common cases such that the generalized system could still run at high speed. Seems like it could be super awesome if so.