The speed of the new cutting-simulation code makes it possible to run it at a higher resolution than before. That makes the surfaces look smooth and nice. Alas, some problems still remain with holes in the fabric of reality mystically appearing and disappearing .
There is an edge-flipping paper by Kobbelt et al. from 2001 which improves the jagged/aliased look of sharp edges.
Update: Kobbelt provides a LGPLv2 licensed sample-implementation of the algorithm here: http://www-i8.informatik.rwth-aachen.de/index.php?id=17
hope this technology use in simulation early