Physads are in fact real. They gain their powers by channeling the essence of the 80s. When you go on an astral quest with the help of a "spirit" to initiate as a physad, you're actually drinking a lot of spirits and just watching 80s movies without sleeping for the entire duration of the astral quest.
Here is photographic evidence of the raw destructive power of those who have attuned themselves to badly painted background and big blond hair:
http://i15.tinypic.com/2w4if6w.jpg
http://i15.tinypic.com/2yy37dy.jpg
The real question is: how do we make rules in the context of SR3 for the big red faces in the background of the second image? If I want my physad to have a big face like that looming in the backgroud, how many power points should it cost? (I think 8, maybe?)