I've been looking at some Borderlands 2 PhysX videos. When someone is shot even the blood is a simulated liquid. What other games react to player input in a realistic manner? I don't mean minor stuff like the cloth of Mirror's Edge or the smoke in Clear Sky. Those are nice effects which add a lot to the atmosphere. But I'm looking for more complex interaction, on a larger scale.

Off the top of my head:

- Crysis
- Cryostasis
- the Red Faction series
- the Bad Company games
- The Force Unleashed
- Stranglehold
- Mafia 2
- Far Cry 2
- modern Relic games and World in Conflict
- From Dust

Many game worlds are just static, non-interactive shells. Software like PhysX and Digital Molecular Matter is free (the latter is even supported by AMD). Havok have their own cloth, liquid and destruction models yet almost nobody uses them.
One of the reasons I was looking forward to Larrabee was the massive potential for advanced physics simulation. Take a look at this Project Offset demo - the way the particles react to wind and impacts is still cutting edge.