I'm new at akll this tuff...but i did read a nice idea about this on the AW site....its in the how-to's , i forget what its called, but its easy to find (there arent that many tutorials there)...anyway, it involves pre-modeleing the deformations, which isnt that difficult with somehting like artisan etc..
once you have this "deformation model", you can duplicate it and deform more or whatever you want. then you can use ixpressions and dynamics to switch the visibility from fmodel to model as it collides with different surfaces. for more realistic collisions i would also suggest using blendshapes with different weights to simulate more realistic crunching, rather than fast switching, .......
i dont know how clear i am beaing here, but lemme knw if i helped...