http://www.afterworks.com/FumeFX/anims/SmokeCollection.wmv

I have FumeFX myself actually.
That isn't doable in real-time. Even with a quad core, it can take minutes to simulate a single frame.

Something akin to it could probably be achieved with CUDA



However they would be extremely limited to who they could sell the game to - only PC gamers with high end nVidia GPU's.

http://software.intel.com/en-us/articles/cloud-based-ray-tracing/
knights ferry or later knights corner *cough*

Yeah, cloud computing is interesting, because you could have supercomputers runnning games, but a lot of things are going to have to worked out and tweaked.