Per-Pixel Displacement Mapping with Distance Functions
William Donnelly University of Waterloo
In this chapter, we present distance mapping, a technique for adding small-scale displacement mapping to objects in a pixel shader. We treat displacement mapping as a ray-tracing problem, beginning with texture coordinates on the base surface and calculating texture coordinates where the viewing ray intersects the displaced surface. For this purpose, we precompute a three-dimensional distance map, which gives a measure of the distance between points in space and the displaced surface. This distance map gives us all the information necessary to quickly intersect a ray with the surface. Our algorithm significantly increases the perceived geometric complexity of a scene while maintaining real-time performance.
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More here...
http://download.nvidia.com/developer/GPU_Gems_2/GPU_Gems2_ch08.pdf
Sorry, I haven't been following what games use what techniques but any games out there using the above? If not can we expect any in the near future, e.g. next gen consoles?