Okay, this doesn't address mindstorm's problem but it does show an example of something I think he is trying to do... this link is to a game (well, it's not really a game as much as it's just a software toy) where you can create TENS of THOUSANDs of independantly flowing pixels, which fall and flow properly using some kind of fluid dynamics. I've never seen anything like it, but given the discussion going on here, I'd love to know how this is done without killing the average PC.
http://chir.ag/stuff/sand/
http://chir.ag/stuff/sand/