> Most other engines (PhysX and Havok) are to the best of my knowledge using something very similar.
PhysX is position based dynamics. The Mueller guy who wrote that paper was a Co-founder of PhysX (back when it was NovodeX, then purchased by Ageia, then purchased by Nvidia) and is now a lead researcher at Nvidia. [1]
> The common method in open source engines is a projected gauss Seidel [0] which is used in bullet physics.
PGS is just the numerical method that Bullet uses to solve for the collision impulses between the rigid bodies (there are tons of other possible methods, Nvidia again had a cool paper a few years back, there are also global approaches with better convergence, etc). This is solving a so-called 'Contact Dynamics' contact model [2], which originates in the work of French mechanicians in the 70s and 80s.
Actually, if op is interested in PDEs in games, check out 'Digital Molecular Matter' [3]. It was used in some Star Wars games, iirc. It is a pretty straightforward Lagrangian discretization (linear shape functions on tets) of a linearized hyperelastic energy density. They added a simple fracture model on top which allowed for cool destruction effects in games.
[1] http://matthias-mueller-fischer.ch
[2] https://en.wikipedia.org/wiki/Contact_dynamics
[3] https://en.wikipedia.org/wiki/Digital_Molecular_Matter