Physics engine updates each 0.0005 seconds, network latency is something like 0.0010s in LAN, but that is just network latency, it takes time to handle and transmit all data, so you need to interpolate all node positions. Let's say you crash to something at 40 meters per second that is something around 2cm resolution at 2000Hz, but probably over 4cm with network latency, add some data transfer to that and you could be at 40cm resolution, so instead of passing car nearby you might crash into it or miss car completely that you were about to crash, with head on crashes you will get vehicles inside each other and physics instability or some other weird effects. Of course interpolation helps with that and limiting what data to transfer etc. 120Hz is what some online games physics run at, that is 0.0083 seconds that is 0.332 meters resolution at 40 meters per second, small speed difference is usually okay, but crashes with high speed difference are usually bit odd, there is lot of interpolation and faking that makes things stable and collisions bit odd. So probably it is not perfectly impossible, but there are probably much more challenges than I understand there being, what very little I understand about time and speed tells me that it will be quite big challenge.