Not intending to be rude, but this is a textbook example of reasoning that I call the liberal-arts fallacy. It goes something like this: If I can describe X in a very vague way, then it must be very simple to build Y. It's just details.
For example: There are very tall buildings in many cities in modern times. In the old days, buildings were only a couple of stories tall. Modern engineering has allowed us to make them much taller. Adding more height is just putting one story on top of another, right? So I expect to see million-story buildings tomorrow. (And if I don't it's because people are too lazy. -- You didn't say this, but this is often included in the argument.)
Also, your hockey comparison is a bad example, because the collision calculations in that example would be relatively simple compared to what (I think) would be required for satisfactory combat. Combat would require a system that involves angles, surfaces, many different types of micro-movements, sway, balance, and probably many more dimensions. And the calculations would also have to factor in many different elements related to particular weapons.
I'm not sure where you would draw the line at approximating all of the above, and I'm sure that different people would have different opinions on what would be good enough. But you wouldn't have to go very deep to end up with a system that would be more complicated and compute-intensive than the physics engines we're seeing in games right now.
No rude intention taken.
However, your example of, what is in essence, an infinite story building, is not an example which properly depicts the situation.
Your examples says, that if you just have to stack on level onto another, then you can make buildings higher tomorrow than they are today.
What I'm saying, is that buildings are so high today, and so tomorrow you could build a building of the same height. I.e. your building example refers to technology that exists today, and building upon it to create technology that doesn't exist today, but could logically exist tomorrow. I'm saying that the technology to do so already exists.
Your balance, sway, micro-movements, and all the examples you gave, are exactly what goes into creating a real-time physics engine, and so no, the hockey example was not simplified or what you claim to be a "liberal-arts fallacy."
Balance, sway, and micro-movements are all based upon the same thing--numbers. It's all calculations. The momentum of an object (mace, or whatever the case is), is calculated similarly to a hockey playing skating. Weight, speed, momentum are all taken into account.
Surfaces and angles are the same thing that are taken into account in real-time physics as well. Having an NPC "react" to something a PCA does, is not far-fetched nor state-of-the-art. I'm not oversimplifying "x" and determining "y" from that, (your building example). I'm saying that X exists, so let's use it, because it doesn't make any sense to use technology that was developed over ten years ago, when we have newer technology that is much better and just as practical for our purposes.
You can simplify my example all you want, and say that hockey, or a physics engine isn't all that complicated, but most people only see the results of an extremely complex system used in a very specific context, which can, (and has), been extended into other uses.