I don't have any experience with Bullet. However, there is a large academic community that simulates human motion by modeling the human as a system of rigid bodies. In these simulations, the human is actuated by muscles.
The muscles used in such simulations are modeled to generate force in a physiological way. The amount of force a muscle can produce at any given instant depends on its length and the rate at which its length is changing. Here is a paper that describes a fairly complex muscle model that biomechanists might use: http://nmbl.stanford.edu/publications/pdf/Millard2013.pdf.
Another complication with modeling muscles that comes up in biomechanical simulations is that the path of a muscle must be able to wrap around joints (such as the knee). This is what you are trying to get at when you mention collisions along a muscle. This is called muscle wrapping. See http://www.baylor.edu/content/services/document.php/41153.pdf.
I'm a graduate student in a lab that does simulations of humans involving many muscles. We use the multibody dynamics library (physics engine) Simbody (http://github.com/simbody/simbody), which allows one to define force elements that act along a path. Such paths can be defined in pretty complex ways: they could wrap around many different surfaces. To simulate muscle-driven human motion, we use OpenSim (http://opensim.stanford.edu), which in turn uses Simbody to simulate the physics.