Thank you all for your replies.
Why are compounds out? you can easily recreate a compound mesh, it is very fast since the original bodies that make up a compound are still accesible and can be easily split.
They are not out completely, of course. And the it's true that original collision instances are accessible after the compound collision is created.. but one problem is that the engine has to store all original collisions in order to recreate the compound in reasonable time. However I'm not 100% sure as to how exactly this affects the memory footprint. Does it matter if the program releases all original collisions or do they remain in memory until the actual rigid body that uses them is destroyed (well, they obviously remain in some form or another, but perhaps optimized)?
The other, much more significant problem, is that a compound collision is not as versatile\fast to recreate as a joint. After all the research, however, I consider it as an alternative.
The physics solver in newton is the same that you would find on hig end physic solution because it is base on the same laws of physics
In fact Netwon is by far superion tah all of the HIgeh end enfgien liek CMLam and the varios DEM solvers.
Yes, true. In the last week I found out that for myself. Constrained dynamics are a real pain and modern games do not seem to use them extensively.
your best bet is to run at a higher rate first for exampel 240 fps instead of 60,
the rigidity should be must better.
Oh, I completely forgot to tell at which rate the physics was run. Yes it is currently at 60 FPS, and upping it up helps quite a bit. In the days of 1.53 that was severely damaging the performance. With 2.0 it runs faster, but still I'm not sure I can afford 240 FPS for physics in a game. (Yep, that's my problem)
That looks like any other physics simulator running at 60 FPS.
Yeah, 60 FPS.
Reminds me of the fixed joints in Garry's mod.
And that's way there are not many fixed joints in HL2. (Or none at all?

)
You can make single collision objects into breakable pieces. It takes a lot of work to set up, but you just create a mesh for the unbroken whole, then separate meshes for broken pieces. When the body breaks, replace it with the parts.
You could also parent the visual meshes all to one body, until the object breaks. Then the mesh will appear completely rigid, and the user won't notice if the physics are a little loose.
It may be a possibility. However, beside the reasons I've already mentioned, due to very generic nature of objects in the game - very little is known at design time (read - the engine does not operate with concepts like vehicle, chassis. More like - joint, wheel) it is going to be really hard to implement that adequately. But in the end of the day, I might give it a try.
As for the code - it seems like a modification of the hinge joint. Is this implementation more stable?