Honestly, I wouldn't waste my time with Physx, it makes no difference unless you play incredible amounts of Mafia II (ironically I do) or other titles; there are really not that many titles today that support it. It would be more of a waste of power than anything.
If you are dead set on using it as a Physx card, then yes, all you would do is set the Physx processor to the 9800GT.
As a side note, 8800GT/9800GT Nvidia cards make great gifts for those who are starting out on gaming and have nothing to go off of. Its still a good card today.
I play a lot of BF3, SCII, and SWTOR. I was told it would help a lot with BF3 performance. SCII I run perfectly and SWTOR I have frame rate issues just due to my 285 being older, the 460,i think, should give me the boost i need to play with shadows and BF3 on ultra.
BF3 doesn't use PhysX, I think... SCII runs on most GPUs newer than the GTX260 with no trouble. What holds that back is the CPU - nothing short of a 2500k can keep this game running intense battles with no lag. In fact, I have noticed nearly no difference between my old GTX460 and my two HD6950s.