from my tests, if you use low poly (that may suffice for terrain and buildings) it is fast enough.
@Boko
jme forum thread for it Another CSG solution
also, the whole point IMO in the cubic matrix is that we can calculate structures and make them fall, to avoid any floating magical terrain. And we can also have flawless AI navigation.
for an excellent terrain you can look at 7DTD game, not open source tho, but their work is amazingly good! dig on the terrain and you will see the vertices moving little by little. but they still are bound to 90 orthogonal or 45 degrees constructions/structures, what is not a big problem but is not natural either (well as we are always runing from zombies we have no time to care for architecture anyway).
there was another game that used a smaller cubic matrix that is like 9 cubes per squared meter (27 on cubic meter), and that will be memory hungry I guess, but may help on letting things look more roundy but may still have a blocky feeling I guess.
EDIT: there is also GitHub - jMonkeyEngine-Contributions/cubes that let us add custom shapes, so I think we could create several for many degrees and have a good enough looking for games (no need to have every fractional angle, lets say just every 15 degrees), but it gets quite complex about corners and edges and some ramps will not look that good either. May be improving it to provide what 7dtd does perfectly, could be a great thing!
unfortunately I have no idea what happened to Digital Molecular Matter (DMM), that is the right complete thing with physics and thermo/chemical interactions (bending, molten, burn to ashes) (I think), not open source either. I wonder if there is enough ppl around that are capable of creating an open source implementation of it? I am not that knowledgeable/skilled 
concerning structural destruction/integrity there is also Red Faction Guerrilla (closed source game too), quite fun to see the whole structure falling, and… it is not perfect either, is just for the fun of it (quite buggy also on PC, so just watch a video of it).
I am mentioning all those, just to inspire you in case you manage to implement something cool xD