I think I’ve heard there’s a way to simulate physics using blender’s softbodies.
Is there? 
You can get a pretty good effect by clicking Use Edges and Stiff quads and putting E Stiffness to the highest it can be. After this, deselect Goal, and set the gravity, Mass, and other sections. Pressing Alt-A will animate this in real-time. Deflections can be set in the menu next to it, the particle settings. This will have to work until rigid-bodies are implemented. Either this, or use a script like Bloded to get IPO data straight from the Game Engine.
Hold on Tight,
Ongnissim