In my opinion it's not the deep mining that is the problem, it's the explosive mining deep underground (more then 20 blocks deep). When you use explosives to mine it throws blocks in all directions. Some of those flying blocks turn into blocks of destroyed stone. I am thinking that sometimes those blocks being launched by the explosion turn into blocks of destroyed stone inside the terrain around the explosion (above, besides, below) and that along with later on mining those "double" block with a pick or auger causes the physics break. I think this because frequently I will destroy a stone block and see the animation of a block falling as if it were an unsupported block falling to the floor and I get the notice of stone being added to my inventory at the same time and every single time I have seen that combination of events (black falling animation along with stone or iron or nitrate resource added to inventory) physics has then been broken.
I think my area is particularly prone to this because I carved out the boundary and a lot of the initial tunnels from one side to the other with tnt. so even though I'm now manually mining out the area with an auger every time I run into one of those "double" blocks physics breaks.
So far physics on the server is still working since the last reboot and I have stayed out of my mine. Commands (/zgate, /day7, etc) are down but physics is working even with other people mining deep with manual methods (auger or pick, etc).
If physics stays running till tomorrow then i'll try to arrange a time where I can continue to mine out my area outside of peak hours when it's known that the server can be rebooted. I think once I have the area cleared out I can continue my build without affecting physics any further.
If this vote does go the route of a server wipe I'd put my vote into banning explosives (not explosive arrows but pipe bombs, tnt, dynamite, flares, etc) all the things that launch terrain blocks in the air when exploding.
anyways my $0.02