CPU cores, even if dedicated to physics, will not provide the floating-point calculation power required to achieve real-time dynamic physics. Graphics cards possess the necessary power for just that, which is why ATI proposed such a solution. Plus, you don't have to have 3 graphics cards (2 for Xfire, and one for physics), the solution can be done through 2 graphics cards. Besides, Ageia tried to provide a solution in order to tackle physics (though it failed miserably) and even though the physics engine can be run using the CPU, the limitations of the effects are much greater on the CPU than if done by a dedicated processor.