Dan's secrets are his own, but from reading the development threads I think I figured a few things out:
Thrusters are not used. Rather, the AddForce() function (or something similar) is used for movement and control.
I also seem to recall Dan saying something about the COG being BELOW , or at least at the same height as, the touchdown points (ie, underground, or at ground level)
Essentially, UCGO uses it's own "hacks" to create it's own physics engine, working around the Orbiter Core's engine, rather than working with it.