PhysX still can be processed by Processor but it's not recommended only.
Games without PhysX title can't use PhysX also. Most of the games out there do not have PhysX title, so, they can't use PhysX offered by Nvidia.
Most games used OPEN SOURCE PHYSICS CALCULATION ENGINE, this mean they'll use whatever hardware(can be both GPU and CPU or either 1) you got to render or calculate the physics of the games/software.
Example:
Bullet Physics and Havok Physics.
So, you can stop your "don't think things didn't work out quite well". That's just your own imagination.
Physics Calculation of a game or software is merely CODING.
It's depending on the manufacturer on what they're into.
Take an example:
PhysX supported(and enabled) games are CODED NOT to perform greatly when you don't have PhysX(Nvidia GPU).
It's a marketing strategic offered by Nvidia basically.
3DMark, a well known benchmarking tools company used to support and partnered with PhysX.
However, now, they had dropped it. Because it's kind of cheating and unfair(get too much score making the benchmark unstable to be judged). It's like you need to make your software(physics calculation) just can run great in Nvidia GPU and run shitty on other hardwares(Intel, AMD).
3DMark 11 officially support Bullet Physics Engine(Open Source) already.
So meaning to say that titles with PhysX (Arkham Asylum, Mass Effect 2, Mafia 2, etc.) will work on AMD cards without problem... Cool!
Maybe I'll grab a HD6850 then. How about DX11 Tessellation?