Woe be to the sucker Stormtrooper who's being picked up and hurled down with great force by a Jedi's force powers. The Trooper flails wildly, grabs onto a pipe for dear life, and then is violently hurled into space when the Jedi rips the pipe from its base and flings it away cruelly.
This is gorgeous, amazing stuff, and was shown behind closed doors at the LucasArts booth at E3. The technology allows for super-realistic body movements for characters and incredibly detailed interactions between objects -- such as R2D2 being hurled into a Jell-O-like block with hated moppet Jar Jar Binks frozen inside it. What it means, really, is that wood will splinter, bones will snap realistically and malleable metals will warp and bend.
Right now, this technology is being applied to a new Indiana Jones game. The Jedi will have to wait until 2007 to see it.