The Karma Authoring Tool or KAT can be used to edit the .ka files that define the ragdoll physics in UT200x. Not much on the site yet, but more will be coming.
KAT allows the creation of (almost) abitrary jointed structures using Karma. UT200x only supports loading ragdolls from KAT, and so it is used for defining the collision shapes, mass distribution and joint types/limits of the ragdolls. Things like the hanging meat would be defined directly in UnrealEd.
There is now a tutorial taking you through the process of creating a ragdoll from a psk using KAT at the UDN site.
"the karma physics stuff was also very very impressive–they had an early jeep demo that, using little more than the game's physics, they had a vehicle to rival halo's. and though there are no vehicles shipping in the game, they'll leave the hooks in the code. oh, and the ragdoll stuff is hours of fun–and setting up the physics on a given model with their proprietary tool will only take half an hour or so."
Source: Polycount Message Board