Bullet objects shouldn't be used for bullets because they move too fast to accurately register collision and forces. Raycasting is certainly the way to go.
Here's another consideration - if you are raycasting with Dark Physics, then you are raycasting to other physics bodies. If you are raycasting to a static mesh, that's fine. However, if you are raycasting to a character controller, then there is no way that you can get accurate collision data.
I use Sparky's DLL in conjunction with Dark Physics. His raycasting is simple, fast, and perfect. I can shoot a character in the arm, rather than shooting at his controller capsule. For this reason, I'm not even going to waste my time with the Dark Physics raycasting.
Something to consider.
Come see the WIP!