I think that ideally, you'd want the liquid to be a pixel wide texture, and say 256 high. Then, you'd UV map a copy of your pipe so that the liquid texture fills it up, from top to bottom. With that, you could have 2 models as people are suggesting, then draw the liquid texture with a memblock, imagekit, or whatever, and it'll let you fill the pipe with liquid, have liquid moving through it etc. So really, the liquid would be an object that is the same shape as the pipe, but with a special texture that you update each frame. If the pipe only has to fill up, then you might get away with just scrolling the liquid texture, like a texture that is half liquid and half transparent.

I am the one who knocks...
