i think im the one who had the idea on how to make it work. i figure yuou need to script/code a number of things to make it work.
terrain model handeling/procedural generation, and collision detection
this has been done quite successfully in the past with various mods. cant name any off the top of my head, but ive seen terrain maps it many a mission. ive also attempted both terrain "ships" and fps style levels for at least 2 dry runs for mod ideas (a reference for my flight sim physics model, and for my decent mod testbed). while this seems to work with simple low poly terrain mopels, id like to see a procedural terrain system that can generate a system of tiles and automatically increase or decrease detail based on the position of the camera. now you can get away with detail boxed to hell terrain models. but the engine needs to be told that these are static, cannot be moved or affected by physics, ai also needs to be aware of it.
improved ground collision detection and terrain physics
collision detection should also be considered. it needs to be smarter, needs to know what a save velocity is, whether your crashing into it, landing at a safe speed/angle, falling over, or just walking. cant have your mech exploding each time you take a step. proper sound effects need to be played for whatever case. surface material also would also play a role. you need to know whether your walking on dirt, rock, gravel, sand, tarmac whatever. also you might want to handle water somehow, non-colidable surfaces with an actual bottom beneath. perhaps some underwater effects if your view is below the surface. possibly include water dynamics, waves, currents, ect. possibly procedural trees with wind effects.
ik based submodel animation and mech physics
walking physics are terrain dependant. given a certain stride length and speed, you need to determine where the next foot needs to go, anhd how the mechanics will articulate to get that placement, and then what happens to the mech as its walking.
pretty much you have to code it all from scratch. some stuff might already be available to the engine and can be used to facilitate the system. but then you have to maintain compatability with freespace, mods, and

of other stuff. when it comes right down to it there are engines better suited to this kinda mod.