OK, that's it. I don't know if you guys realize this, but the Havok kit is MIDDLEWARE. Middleware by nature is much more demanding of the processor than hand-written code because it functions differently. Hence, the reason why Killzone won't be using Havok physics is mainly because they don't have enough room reserved for middleware with the advanced AI and detailed environments and characters. But this isn't because the PS2 can't handle complex physics! In fact, as some of you may know, the PS2's parallel processors are more qualified for advanced physics engines than the Xbox or GameCube. However, the Xbox and GC have more memory so they store their detail rather than stream it constantly as is the case with Killzone. (Since is using the streaming method used in games like Jak and Daxter.) For that reason games on Xbox can use the processing power more for physics and AI calculations than the PS2 can... because it isn't using much of the processor's power for geometry and textures.
With that said, don't exclude the possibility of advanced physics in Killzone because they are probably writing their own code as many console developers do. Read the article the RP guy from Guerrilla sent, he said they are trying to limit middleware use but they are implementing their own physics appropriately. Now I am sure the physics won't be as complex or impressive as in games like Half-Life 2, Doom 3, and Max Payne 2... but that should be understood because even the Xbox would have a hard time handling those. (And you know the Xbox ports of HL2 and Doom 3 are going to be severely dumbed down. Look at ports like Soldier of Fortune 2 on the Xbox, it looks like the PC version with all the settings on their lowest quality, and has a worse framerate. And SOF 2 is NOTHING compared to Half-Life 2 or Doom 3.)
I just hope Killzone at least features realistic ragdoll physics because I think ragdolls have become mandatory in a successful FPS today because it allows for limitless graphical and even gameplay possibilities.
I know after reading this you guys will probably think I am a PS2 fanboy but that's not the case, I just wanted to set the record straight.