Other than that dynamic objects should work but you have to set there other settings because they will be effected by objects
I did it that way in the book of portals for the walls that went up and down the movement worked fine but it was effected by
other objects which I didn't want for the walls but I think it should work with set object position you may have to adjust the other
settings such as mass and restitution not sure if those are the ones but im sure ive moved physics dynamic objects with set
position before. It may be a collision or gravity that's infact moving it back
Edited
I think you have to
Delete3DPhysicsBody( objID )
SetObjectPosition(objID,x,y,z)
Create3DPhysicsDynamicBody( objID )
fubar