Not sure if you had seen this yet - but it manipulates model bones with c-script (WDL files included):
http://www.rumramruf.com/3dgs/bonesdemo.zipIn theory all you would need to do is create a physics entity to use for determining angles and rotations - then use c-script to match those angles and rotations on a model with a matching skeleton. Since each physics entity would be it's own bounding box connected with constrants (hinges for the most part - though others would be appropriate too) - you would be able to keep fairly accurate collision.
Right now though with Commercial and my one physics entity all I can do is a pretty good ragdoll snail. It should work though.