Swaying grass, and swaying trees is definitely possible, it would create some lag, but most computers these days can handle that fine, or at least for the grass, should be able to turn it off.
Digging holes, or random cracks in the earth, that would take a LOT of work, and a LOT of server stress. We may need to wait for the next, next, gen of MMORPGs for stuff like that.
But hey, ya never know.
Don\'t know if Planeshift will have grass or swaying trees, but I don\'t see why not, the team seems very capable in what they have already done.