But Company of Heroes only took about what, 3 GB or something. And trust me, the graphics are great. On the highest settings, the game gonna look like Half-Life 2, only 100 times bigger.
Physic Generators won't require THAT much space. Because it just generates things, it doesn't load massive-pre-made things (such as debris).
With about 9.5 GB to play on, I don't think having destructable environment is gonna be a big problem. Besides, I know that not all of the environment is going to be completely destructable, because if it does, some people will be upset if they load the game and the city lies in ruins for the rest of the game, right?