The game below is due for release Spring 2011.
Very interesting use of what I’ll call psuedo fluid dynamics. It would appear that by a clever use of texture mapping and scrolling and stretching/warping UV coordinates Ubisoft have managed to create the illusion of Fluid Dynamics. The ability the game has to sculpt the landscape and see the water flow, will certainly provide a level of playability to it. The novelty might wear off after a while, but this does appear to be a novel technique (the game so far is two years in the making).
This technique could well apply to Climate Change scenerios or flood simulation.
It also makes use of volumetric clouds and different physical properties for the ground such as the difference between rock and soil. The soil spreads, which is akin to a melting function, or blurring function on the terrain displacement map.