How could a automatic realtime terrain engine work inside blender?

Hi for my university dissertation I have to have the computer generate a terrain in realtime. ie) I need to be inside the game engine whilst the mesh is being generated and see it pop up as each part is generated.

Would this be possible in blender? The only way I can see it being possible at the moment would be to use an iterative python script and use blender with verse with ogre. (blender to edit the mesh on the fly, ogre to render in realtime and verse protocol to link them together.

Any ideas would be greatly appreciated.