Yes, the physics engine runs at 2000fps. As far as metal tearing is concerned, that actually has nothing to do with torque 3D (well... not "nothing" but almost nothing) Torque 3D just renders everything and puts it on screen for you too see... now while it isn't the best system in the world, it can display a couple hundred thousand polygon mesh with no real issues. The rough spot in this will come from the Physics engine side of things and calculating the mesh deformation. That will drag performance down quite a ways... granted... I don't see a real need to make this crazy high resolution... perhaps 3 times the current Node/Beam density, and 1.5 times the mesh polygon density might be enough really.
I think only graphical side problem has been shadows, those are really really heavy, while graphics engine can do even millions of polys, shadows kill performance first, then closely behind comes some physics stuff. Anyway things probably will not be in a future what they are today, new versions probably change what we have now, so maybe in a future there will be something that we can't even except now, that will bring crashing again to new level, these developers do have very good track record of bringing good stuff, they probably have something in burner that might improve crashing aspects without necessarily needing huge computing or metal tearing to get improvements in immersion.