I have been looking at exactly this problem recently.
I have not solved it yet but it can be done as Lee has emailed me some code showing how they do it with ODE. Even the TGC guys struggled getting it to work with bone animation.
We can work on this together if you like as I will be adding it to Dark Dynamix in the next few weeks.
Are you using a Physics/Collision lib? If so which one? It will not matter if we are using different solutions as the DarkGDK side of things will involve the same process for both of us.
I will post what I have so far if you like? I probaly won't be able to look at this properly for at least 4 weeks as I am going on holiday on Saturday.
It will not be easy but I am confident I/We will get it working.