JoelB possibly read about Trespasser's audio system on Richard Wyckoff article at Gamasutra; at least this article is the only one I remember mentioning Trespasser's audio system... Do you guys know of others?
The passage that mentions the audio system:
Another major system for Trespasser was its audio system, which we described as "real time Foley" because of its ability to generate collision and scraping effects between differing sound materials in real time. Although the system could have used more sound material data, even with what it had it resulted in some wonderfully immersive sound effects which most other games do not duplicate - things like scraping a board down a concrete surface or hitting an oil barrel with a metal bat sound just about perfect. Since the system doesn’t simply play two sound effects but actually chooses from a group of samples and sets volumes based on the underlying physics collision, it sounds much more natural than most other audio systems currently used.
Based off the information presented so far, it would seem they traded off cpu usage for space (understandable at the time). Instead of specific algorithms for audio they simply strapped the calculations to the output of the physics engine and used the huge library and sound tags for quality result.