I believe this actually is where gaming is going though, to a very real physics model which takes away the feeling of artificial limits.
Where necessary, limits can be placed on the gaming through outside factors, e.g. in a military game, unacceptable civilian deaths leading to failure, or in a GTA type game, the feds arriving.
I think to make the experience feel unlimited, these limits need to be applied through such in-game factors, rather than certain skyscrapers being magically indestructible.
It should be easy in most cases to work the story to provide the necessary incentives, say putting one of your side's key characters in the skyscraper with the bad guys, preventing all-out destruction.
There does come a point to enjoyable gaming where we, the players, have to choose to embrace the story, rather than vandalizing the sandbox we are playing in.