Syndicate Wars was an isometric released before the original Fallout.
So why didn't Fallout, the original, contain geometric displacement? Fallout was next-gen in its time. =p
In all seriousness: Destructible environments are not Bethesda's bag, first, and second, take a lot of time to work for due to potential memory drag.
A 2d fully destructible sandbox with pixel-perfect deconstruction brings my system to a screeching halt after more than thirty minutes of play due to having to keep track of all the destroyed terrain; so there's the issue of RAM/caching.
Even Voxels are used sparingly these days, despite being amazing in my experience with them.
Destructible environments is tough to do, yo.
Especially if you start doing building destruction with the way Bethesda does areas. The moment you break anything outside, the inside area also has to have that applied, and as the exterior and interior world are separate, you will find the hole you made in the wall, on the outside, shows nothing behind it and the hole you made in the wall, on the inside, shows nothing of the outside. At best, you get to see the inside of the building with nobody in it which magically spawns people the moment you step inside.
If they were to truly do that sort of destruction they FIRST would have to remove all areas from the game and just make Fallout 3 one, gigantic, area (similar to Crysis, but without ever having a level transition). At least, the first reasonable step they could take from my knowledge of destroyable environs (which isn't horrible).
Are there procedural methods or new means of creating such displacements and fractures in objects that I am unaware of? (Still not sure what Fracture uses; I assumed it uses voxels or terrain displacement)
In any case, the cost to make that work in the world of Fallout 3, as currently constructed, would've pushed the game's release date back significantly due to their (relatively) inferior physics engine having to be revamped and their level designers having to re-learn making areas, and other stuff needing retooling and AI upgrades.
Basically, a package upgrade for a feature which, though insane, may cost more than it would be worth to put it in. =(