In what I've seen of games like Fallout, Torchlight, and Ultima, the nature of the environment doesn't lend itself to physics or a changeable world. Characters can't jump, I've never been able to smash through walls, and no matter how many fireballs I cast, the city doesn't burn down! That would be a really, really sweet thing to be able to do. Maybe not in turn-based play, but I think VQ has some real-time potential in these areas.
One of the most challenging to implement, I believe, would be gravity. I'd argue that it's essential for an actiony first-person experience, and the math is relatively easy. But does it create a performance issue? Should characters in an isometric view be able to jump?
Destructive fire would be a cool thing to add, as well as the ability to kick down weakened, worn doors. Tree-felling also comes to mind. Maybe rain could make steep slopes more "slidy", and random asteroid collisions could create craters.
Characters could mine, create tunnels, build monuments to themselves, etc.
With the open-world destructive/constructive potential of VQ, what mechanics would you like to see for physical/chemical/physics-based interactions? Do they add enough to the world to make them worthwhile, or is this something you'd rather see in a novelty mod?