It was running wonderfully on the HD3800 series. The ATi drivers needed to be modified to get it running, apparently they modifications were rather minor and easy. However, the biggest hurdle was that the drivers would only work in Test Mode, ATi had to officially add support for CUDA to allow it to work in normal mode in Windows. The hack was posted on ngohq. Then nVidia offered the hacker, Eran Badit editor-in-chief of ngohq.com, a spot on their developement team. The issue then came down not to adding support for ATi into the PhysX engine, but adding support for CUDA into ATi's drivers. That is where it ended, ATi never allowed CUDA support for the drivers, and Erin gave up trying it seems. ATi had to do very little to get it working, and there wouldn't really be any shady stuff since developement was actually being done by a 3rd party, someone how originally though he was defying nVidia when he made his hack...
If you really want to lean who was responsible for ATi not having PhysX,
this is an interesting article, it certainly wasn't nVidia's fault that PhysX doesn't run on ATi hardware, nVidia tried...