Worm muscle contraction simulation(involved many individual muscle pieces)

To begin with, are you totally familiar with "boned/skinned models" and their place in video game engineering?

that would be a basic starting point. you are asking a very advanced question. If you have not reached that level, pls delete the question and enjoy the next yr or two of research! :)

Using springs from the physics system sounds obvious, but probably isn't good enough for this.

Springs can be set to "want" to be a certain distance apart (like a resting muscle length,) but generally each object (chunk of worm?) gets only 1 attachment. So no good way to simulate, say, a ring of 6 lengthwise muscles, all acting on segments. Plus the system tends to get jittery when lots of things are all affecting each other.

If you find code for a high-powered yet slow physics simulator, could run it in Unity (even C++ though a DLL, I think) and just use Unity for display.

I think using springs from the physics system is a good idea, I can certainly give that a try, but I was wondering if there are any built-in functions in unity that does non-bipedal mechanism. I understand there is one in unity that simulates human skeletons, could I possibly tweak the system to make what I wanna do? or do you guys know of any video tutorial that teaches this mechanisms, thank you!

Well there's your answer ...

http://answers.unity3d.com/questions/437115/in-a-bonedskinned-model-can-you-shrink-a-bone.html

of course, you CAN easily shorten a bone. So, that's perfect.

(There isn't really "bones" it's just the distance between two "joints" in a skinned model.)

So, you have to get to work learning to use Cheetah3D, Maya or the like to make "boned" models, and then Unity. Good luck!