Yes, the terrain is a single mesh, it is an octree to enable any speed up, and it is passed to newton as a mesh (not a heightfield) The character walks on the surface. And yes, the character is animated, it has a simple animation, but it is animated using a skin shader. It has 4 weights per vertex, with 25 bones or so, shadowmapping and normals.
The next step is to add more characters, enemies, monsters, NPC's..., i hope i can achieve at least a solid framerate of 60 fps and that the whole thing can run smooth with at least 10 characters like that (15000 triangles, if the models had less triangles, the performance would posibly increase.) on screen. That screen with vsync disabled runs at 120/100 fps with a GeForce 425M, so i am not sure if that is a good or a bad performance. The good thing is that with a GeForce 8600, the performance is similar, so who knows?