But the scenerio you're describing isn't the same thing as nvidia and physx. Physx is a enhancement that Nvidia takes away if it senses that an Nvidia GPU isn't the primary. You're describing taking away performance if an Nvidia GPU is used. I don't think this could fly legally if done out in the open, and it's a invitation to lawsuits if done on the sly, cuz sooner or later, it will be revealed.
But even if they could somehow do this, it might not work in the end anyway. Customers would just buy an intel system that works with both AMD and Nvidia CPUs. AMD just doesn't have the clout/marketshare to make something like this work.
First of all, putting 2 video cards into the same machine is one thing, having mix video cards to generate output for a single display is another. SLI only works on Nvidia cards and CF only works on AMD cards. That means, those cards don't work together, but independently within the same system.
It is illegal if the presents of a Nvidia card will actually lowers the performance of an AMD card, and vice versa. If Nvidia allows their video card to act as a PPU, then it should work regardless of what cards being primary. Now Nvidia can do it, but decided not because not only they have to make sure their cards will work as a PPU with other vendor's video card as a prim., but also have to consider the performance of the primary card, but how can Nvidia ensure that when it isn't their product? Imagine the QQ you will see if AMD card's performance drops 10% after using Nvidia card as a PPU while playing PhysX games. Richard always complaint about how Nvidia's code isn't good for AMD video cards because it was engineered that way, AMD fanboys believe it. When Richard says Nvidia's code are nothing special and will work on AMD video cards, AMD fanboys believe it. When Richard says Nvidia is preventing (blocking/locking) codes from getting into AMD video cards, AMD fanboys believe it. Imagine what he will say when AMD + Nvidia card as PPU < Nvidia + card as PPU.
Nvidia deliberately make the check easy to break, just like how CPU/GPU are made easy to OC. These are unsupported features and users are at their own risk. There are lots of Nvidia haters, but those who don't give a crap simply break the check and move on.
As to i3/i5 IGP, it causes problems when there exists an discrete video card if not disabled, let alone physX.
The claim is actually very simple. Let say I change the position of one of the key on your keyboard without telling you, then you probably won't find out until you press that key. When you find out, I was no where seen, but your boss is going to hunt you because of your work. In terms of hardware interface and programming, each bit is like a key, and there are millions of them. Nvidia code paths breaks from time to time because it is simply impossible to test every single combination. Those who assume things will work and the cause of bugs because "Things that can go wrong, will go wrong." I don't think that Nvidia's drivers are bug free under an all Nvidia gears environment, and the miracle of something works perfectly automatically sounds more like a joke to me.
Even today, people believed that it is very important for a clean install when it comes to video card drivers as not only they may impact video cards from a different vendor, but their own cards. Note that video cards are made universal long ago, bug still happens often. This is mean vendors are sabotaging each other with driver conflicts? I say it looks more like old bugs that was never fixed.
So I have 2 identical systems with different OSes. While the one with window 7 runs CIV 5 with Dx10/11, but the other with windows XP can't. You will say, XP doesn't support Dx10/11. Well, I don't see people saying that is illegal for Microsoft's action. In fact, directx only works on windows and not any other OS, what does that mean? Well we have been locked by microsoft for sometime now, didn't you get the memo? You can move to another OS, but those Dx games won't run, even though they used to run.