Physics based combat? Plays bad, looks really dumb and is just a dumb idea in general. Using physics for reactions is fine, but not the actual swinging of weapons, I mean, how many times did the guy miss at close range because the arms just flop about.
Usually, the problem with this is that when they say "physics" they really mean "ragdoll physics". Things like heft and inertia are all but ignored, because the engine looks
like super cool and stuff when everything flails around wildly. This game does a bit better on those fronts, but fails because they are using really exaggerated animations to show off the physics. The character seems to have no clue how to wield a sword, and using big sweeping motions at odd angles to show off the inertia of his swings, rather than fighting the way a real swordsman might. Watch some live fencing videos to see what I mean; reality is very much physics-based, but the people involved aren't limited to such extreme broad swings.
Physics-based combat likely wouldn't be nearly so bad if they would really commit to it 100% and everything it means. Too many games would rather show off one aspect of physics while ignoring others, so they can show off fancy-but-unrealistic effects (see the cloth physics in Mirror's Edge).