Here’s a sample of Drakkar Dev’s “Zorro” technique: a combination of shaders and code to dynamically dig “holes” into any mesh (floor, walls, etc.).

It was developed to help us placing “ravines”, “gorges” or “traps” (or whatever digs into the floor geometry) into the new game (still unannounced) without having to modify the background meshes.
It has been developed within Unity3D environment but it’s core principles can be easily applied to any game engine that allows custom shaders.

[youtube=http://www.youtube.com/watch?v=CofzoRmNJU0&w=560&rel=0]