The last game I saw with destructible walls was Red Faction, and before that, X-Com. I don't know why we don't see this feature more often, as it creates so much potential for strategy and makes the environment that much more dynamic. In any case, I have implemented destructible walls in my engine:
Setting the explosive:
The aftermath, with smoke clouds and a new hole in the southern corner of our building:
The limitations of this method are several, but nothing with horrible implications for the gameplay: for one, I can't alter the shadowmap as easily as the collision map. Second, after destroying all the walls the roof will still exist and float on nothing.
In my perfect vision in my head, there would be a real-time lighting system for all the game elements, and a physics engine to determine realistic roof collapse. I'll settle for this, for now; I'm very pleased with it.
Advertisement
Rick Shaw 
Favourite