Thomas Diewald (who is also the author of the excellent kinect library dLibs_freenect, and many Processing pieces) recently created another library for generating realtime fluid simulations in Processing, using either the CPU or the GPU: diewald_fluid. The results are quite amazing, and it is also very fast, specially when using the GPU.
The library is based, as far as I can tell, on the Eulerian grid method described here, and the GPU version relies on GLGraphics to load the GLSL shaders that perform the computations on the video card. Performance is particularly good in this case, and simulations typically perform at 30 fps or more even with an entry level card.
Very Cool! :)