This makes sense, I'm going to try it out now.
My earlier post : I was playing at 2560 x 1440 res, all settings maxed, 60 FPS capped on a slightly overclocked 7970. Silky smooth everywhere (60 FPS+) until the moment where more than 3 bad guys start mixing it up, then it drops to 15 FPS (at one point, FRAPS recorded 10 FPS). This isn't a little drop, this is something else.
Maybe running Physx on the CPU in addition to AI when bad guys enter the scene, taxes the CPU too much and it all goes to complete shit?
I would've expected AMD cards to choke a little on Physx, but not like this.
I'm going to retry Physx at low to see what happens because I think a restart is needed first.