Have you looked at ATi's white papers? I suggest checking out the Data Parallel Virtual Machine they demonstrated at Siggraph.
The physics API (havok-based) is probably part of the GPGPU initiative. It is DX9-based because DX10 lacks certain features (like scatter) available in DX9.
Remember, the X1K architecture was built with GPGPU (such as physics) in mind. I highly doubt they would bail on it before it's conception.
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