I'm not 100% certain, but I will bet that Kripken is using bulletphysics* collison detection routines to do that. He's already shown vids of using bulletphysics to handle stacking of crates.
Also, Sauerbraten's release history shows a revised collision detection scheme to be in the next official release ( svn too ), but I'm not sure if it can do that.
The engine keeps getting better and better, thanks to all the hard work of the people who develop it.
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http://bulletphysics.org/wordpress/