Ah yeah, I remember somewhere between the 0.99's and 1.0's there was a change in the Physics engine (maybe an entire switch from Newton to Box2D?), but it should work the same after you lower your values down.
To move a physics object now as of R1.2 you can store the old X and Y velocity, disable the physics behavior, move the object, then re-enable it and set the X and Y velocity to the previous value.
Also, there is a layout size limit of 20,000 in each direction for the physics engine I think, otherwise the physics objects will just stop.