"Sticks And Stones, I call it"
Check out this video in which an academic physicist discusses (with some surprise and awe) the physics systems demonstrated in a homebrew vehicle simulation, Rig Of Rods.
The actual system, which includes absurdly realistic elements such as chassis bending on large vehicles, can be found here. I don't believe there's any games using this level of physics yet, but I don't suppose it'll be long before someone picks it up. The blog for Rig Of Rods has gone quiet - a tell tale sign that its author has bigger things to worry about?