hehe. me and me mate mess around with the colliosion bug sometimes... just cruise into him at like 10mph and my car goes about 100ft in the air whilst doing some aerobatic barrel rolls and flips.


and at the moment I think it needs improvement...
)


main loop (at 100Hz)
{
inner loop (at 20Hz, every 1/100th of a second which makes 2KHz)
{
Ray casting to check possible collisions (also checks rays from other vehicles)
Check rays according to velocities and determine if theres unavoidable collision
If collision occurs
{
do damage according to prediction
}
Move Car
}
Create bounding box according to vehicles current shape
Bounding box checking to determine collisions
If collision occurs
{
do damage
}
}
As for the down ray - I'm not sure. There would probably be one for the main simulation, but I'm not sure on how relevant it would be for collisions as I'm unaware if you can damage from that direction 

)
But it doesnt explain exactly how the prediction works, or even if it is true prediction and not just some form of lag between engine components.
Therefore you dont have to draw every frame of movement - so continuous detection should only be CPU limited (in theory)
But practically you're probably right :s



