if the game engine features a modular design then it is possible that the physics library gets swapped out depending on whether there is any hardware support available. Just because physx has mainly been used for effects so far doesnt mean it cant be used for more, its a full physics API with all the tools necessary to do what the OP claims, whether it does so is another question.

Having played the game, i'm actually wondering what effects physx is being used for, there arent any real destructibles, explosions, cloth effects, etc... Maybe physx really kicks in once you have dedicated hardware for it? Its all conjecture on my part.