I wouldn't doubt something like this can be hacked up though. There was that terrain deformation mod for Supreme Commander, and the engine didn't really support it at all.
And that multiplayer mod for Oblivion (although it's extremely buggy).
I'm sure from using scripts/flowgraphs it's possible to to not only do dynamic fire, but (assuming the terrain is one big voxel object) also deformable terrain, by using some hacky-hacky methods to reproduce the effects.
Then again these effects would look cool mostly as a "Wow you actually did it!" kind of view. It would probibly be overly-resource intensive for the amount of fire, and would most likely not be perfectly accurate in terms of spreading (see Sims 2 how it determines fire spreading) and damage. But I still think it can be done.
I mean, hell. Someone was able to give fully working water physics to happen, and even create a tidal wave effect that sweeps everything up for Crysis. Granted the engine wasn't built for it so it's not perfect, but still looks great.