Has any of this stuff ever been used in a game as a none tacked on and completely out of place way?
This paper and all the recent ones like it from NVidia are actually based on particle-based ragdoll technology from the first Hitman game. Ironically nobody does ragdolls that way anymore in games.
The specific stuff shown in these videos is impossible to use for gameplay because it only works on NVidia hardware. So graphical effects only. Which is a pretty boring use of physics.