they didn't have any new tool for the tree. what tool would that supposed to be?

actually there weren't any big new features at all. originally the goal was to show-off stuff like fire, smoke, fluids, crowds,... but none of that worked out in the limited time. they had enough to do with getting blender 2.5 somewhat stable. i think the fire looked nice though even if it wasn't realistically simulated but some fake turbulent texture stuff.

what's the problem with the collapsing dragon cave? you can see that the dragon destroys some of the pillars in the fight. to me you seem to see problems everywhere where they aren't any? at least not big ones. hey, dragons don't exist! that was a big flaw in the plot.