Quote: "Lol, I just challenged myself to knock a box out of the container"
Oh dude, you won't believe how much I did this in the meantime

Try to kick a box straight upwards, then try to knock it again - volley style
Quote: "is that 3D with one dimension ignored"
No, unfortunatly just ignoring the Z axis doesn't do the job. It's a bit more complex. My way was to first attach a 2D joint to each object, that constrains it on the plane. Then there are some ugly quaternion things again, to constrain rotations to the Z axis. All this has to be done so that the physics simulation itself stays consistent and believable! Now this is all being done for you by QuickODE by just switching 2D mode on

But you're right that the objects you actually see are normal DarkGDK 3D objects. Of course you can do all sorts of stuff with them: Hide them and align sprites to them, texture thin boxes to appear like sprites, keep the 3D look, ...
I'm glad you like it!
Now the plot thickens, the fps decreases, and the awesomeness goes through the roof.