I don't think it's just a matter or early 3D physics being wonky. Plenty of Japanese anime and 2D games have intentionally exaggerated boob jiggles because of horny animators and a horny target audience that is obsessed with boobs, panties etc

I think to people like this goofy boob physics have very little to do with realistic simulation of soft body tissue and much more about being a signifier of whom the game is for