You can apply Tessellation to anything made from polys or normal maps, it's up to the developer to decide what they want to Tessellate.
Oleg could easily apply it to the SoW engine without "protrusions" on surfaces, he just needs to apply it only to the poly's on the model (don't use mapping) and limit the factored amount.
For a bit of fun try this (Note must a DX11 card) :
http://www.geeks3d.com/20100819/gpu-...ion-benchmark/