NGOHQ.com posted an experimental beta patch to re-enables PhysX when ATI Card is present. Use this patch at your own risk.

As you may or may not know, Windows 7 allows two display drivers to be used at once like in Windows XP. Therefore, it is possible to use an Nvidia card for PhysX and ATI card for graphics rendering. Sadly, since the release of 186 graphics drivers, Nvidia has decided to block this feature anytime a Non-Nvidia GPU is present in the system. In addition, for some incomprehensible reasons, the latest version of PhysX System Software also prevents PPU cards from working if a Non-Nvidia GPU is present.

Patch Re-enables PhysX When ATI Card is Present