A tech-demo video of a fairly new physics toolset called OcataveEngine has surfaced. The 1:42 min. footage shows off a variety of engine capabilities, with the highlight being its water effects:

The OctaveEngine middleware by Prometech is being developed specifically for games and said to become commercially available in winter 2007. It's currently used in NAMCOs upcoming arcade version of Tekken 6, which is due by the end of this year. Further reports (in Japanese) suggest, that support for Windows-based systems including DirectX 10 is planned as well.