I recently added D4MD
(deformed) to the Featured Projects area; it's a vehicle simulator
running on OGRE with a CAVE interface, and features dynamic mesh
deformation based on collisions. Panels buckle, glass smashes, it looks
very realistic indeed. There is also a short video sequence available
from the D4MD forum thread. Amazingly, this was the work of a 2-person team on a final year computer engineering course.