I recently I found an interesting side effect that occurs with the Bullet engine, because of the ''2 objects cannot occupy the same space'' rule. What I did here is to build a 2D wall, made of simple collision boxes. Then, once the wall is stabilized (and the physic asleep) I force a larger box shape to appear INSIDE the wall.
The result is, visually, quite close to an explosion.
Here's a video capture (Thanks to Danko for the gorgeous music, and to GameStart for the 3D engine & bullet integration).

A possible next step would be to implement a very basic version of Scorched Tanks using this funny principle.