@gorenhttp://ufoai.org/forum/index.php/topic,6.....l#msg50610
"No. Arisian dove into our engine a year or so ago to do a lot of work on it, but his conclusion in the end was that it would essentially have to be rewritten from scratch to really implement destructible terrain.
I don't think it will ever happen with UFO:AI, but if it ever did, it would almost certainly not happen for years."