Faked blowing via well done animations(different ones) are probably the way to go for us little people. The physics engine path has potential if I can get the thing to work(see physics section thread). I think I have it set up properly, but lack of coherent examples and good documentation are not in vast supply. This section of the manual needs a lot of attention.
I took a look at some of the Gamedev demos...some interesting stuff, though I have yet to find any with source code I can open.
I'll search again when I find the time.