http://cs.ubc.ca/~van/papers/2010-TOG-gbwc/
http://code.google.com/p/cartwheel-3d/
Vids showing what it can do:
http://www.youtube.com/watch?v=lOxeyyooDmw
http://www.youtube.com/watch?v=MHj8RDfyqP0

Based on ODE.
I wonder how much CPU time this needs... would be awesome to see integrated into a game engine!