Honestly, this looks like another Batman AA kind of deal. You see that kind of immersion from a Call of Duty game without the FPS hit. Adding those stray bullets in say, Havok wouldn't do much performance wise.
"Hey guys, lets take out animations and features that could've easily been there and put them back in for our paying vendor! This is progress!" That's what this is and everyone can see it.
Also, Physx would be a pretty big deal if it wasn't crippled on the CPU side of things. Physx is coded to run on an immensely parallel architecture (G80+ SP's and up), yet only runs on a single core when used on a CPU. That's RIDICULOUS. It obviously spawns at least 32 threads because a 9500gt/8600gts is the minimum, correct? Also it was recommended the GTX 260 be used for Physx? What's that, 192+ threads? So what's stopping it from happening on the CPU side? Oh wait, that wouldn't sell nVidia video cards. Sorry, forgot. Proprietary features FTW? Unless there is a valid explanation for this, nVidia is intentionally crippling Physx for non-nVidia customers when it doesn't have to be. We're at a time where hex-core CPUs cost less than an Ipod. How about un-crippling Physx to actually take advantage of our hardware?
I'm the last to hop on proprietary features. I did play Mirrors Edge on my 8800GTS and it wasn't anything that couldn't have been done in many (if not, most) engines. Just look at NBA 2K10 or NBA live series, the jerseys and net are pretty complex and the jersey/net motions are NOT pre-rendered, yet there isn't a noticeable performance hit. It is usually at 60FPS with any modern dual core and 48xx or 88xx series card.