I was just playing a bit with bullet and did try to make a domino scene with the typical chain reaction. I noticed some things:
* my objects were just a bit above the ground
* if I try to achieve realistic falling (in terms of speed) I need to make the blocks very small but that did not work out well, block were falling through the floor and so on
I tried a bit and gave up to tell you about my distress
Bullet (as well as some other commercial physics engines, although a bad excuse) has some hard limits. Knowing them is crucial to use the physics engine successfully.
Basically dynamic objects smaller then say 0.30 units in any direction will fail. This is because there is a tolerance/margin of 0.06 in all directions.
I might make this tolerance tweakable.
Here is a scene that shows working dominos (from the new year logo):
Hint for dominos: get the friction right
Try setting the Bounds tab to 'Box' instead of polytope, and make sure that the materials fh setting is set to zero. This should keep things on the ground.
For faster falling, make sure the Form tab is set low, like 3 or 4. And maybe increase the gravity to 20 in the world settings tab. And keep the mass low.