Group of enthusiasts is working on interesting project – classic Unreal 1 engine enhancement with real-time physics, based on PhysX SDK. Current version supports only primitives like boxes and spheres, convex meshes and several joint types, but result is already impressive:
Future plans include vehicles integration, soft bodies and possible ragdoll support. You can download beta version of PhysX mod for Unreal v. 227 here
Hope this project will be more successful than this abandoned PhysX integration into Half Life 1 engine.