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Awhile back (when hl2net was down) I was reading about the features of the Source engine ( http://www.valvesoftware.com/sourcelicense/enginefeatures.htm ). I found a bit of information that a lot of people were wondering about.

VALVe said:
Physics

- More responsive world with realistic interactions
- Sounds & graphics follow from physics
- AI characters can interact with physically simulated objects
- Ropes/cables, machines, constraint systems, ragdoll physics
- Can be controlled by level design
- Kinematic animated bone followers
- Custom procedural physics controllers
- Vehicles
. Wheels slip and skid
. Realistic suspensions with springs on each wheel
. Realistic leaning during acceleration/deceleration and turning
. Individually tunable parameters such as horsepower, gearing, max speed, shift speed,
tire material, tire friction, spring tension/dampening etc.

. Multiple players in a vehicle in multiplayer
. Hovercraft support for cheaper simulation
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