You cannot animate 3D meshes within Acrobat at the vertex level, so "morphs" of shapes are not possible. Animation support is limited to object-level functions such as position and rotation, and material properties such as color and opacity.
Okay. But each mesh is an object in the file, right? Since the blocks are rigid, all I need is to change position and rotation of each block. I won't need to modify vertices since no deformation at the mesh level occurs. Is that possible?
If this is a possibility, then the next question is: can it be done for 160 blocks for 36,000 steps (36 second run with data at 0.001 seconds)? how is the performance?
Yes you can move objects in 3D space (either using scripts or animations embedded within the U3D data) but performance is nowhere near that good - Acrobat's 3D engine is not intended to provide game-level performance so on a typical desktop machine you'll only get a handful of steps per second.
Since the human eye can't distinguish more than 20-30 frames per second there is no reason to go beyond that, and in an interactive 3D scene 5-10fps is fluid enough for most people.