So is it mostly an engine limitation or a hardware limitation? Like if you had UE5 on a high-end Mac Pro
, which one would hinder the particle generation the most?
You are asking the wrong person.
That being said I would guess it is a coding problem.
Each individual thing(soft body simulation, rigid body simulation, and particle simulation) exists. No one to my knowledge put them all in a video game. They have been used all together in CAD simulations, for engineering and architecture calculations. And those things have been done in the 1980s on AT and XT PC. You can code something that does each of those so it stands to reason you can code something that does it all at once. But you still are faced with coding each and then having them work together.
So I'm guessing you can create something for a video game that would use all three. No one has done it because why would they? The end user would not see all the calculations the game is using. WWIIOL had a very detailed damage model for example, but the player could only see the very often surprising results. A bullet could penetrate the hull and put a hole in the oil filter, the engine would run for 15 minutes without an issue and then it would set itself on fire. That would appear random to a player. VG designers rarely do stuff that the player doesn't get to see 99% of the time.
UE5 is not a physics engine, it is a graphics engine. Its job is to run visual effects. Its internal workings are not that different from what Quake I engine was doing.
But like I said you are asking the wrong person.