Here is a demo using the open source Flash development called Papervision3D: http://www.anthonytambrin.com/pv3d/dynamics/ Wondering if anyone has heard of a game implementation using Papervision.

The effect is interesting, and I can already think of several simple game designs that involve just that effect, some scripting and a pretty background.

more Papervision3D stuff:
http://www.papervision3d.org/demos/creature/
http://wiki.papervision3d.org/index.php?title=Examples