technique used to simulate oil in game "feed me oil"

I am targetting ios games and am quite new to Unity but have some familiarity with non gaming c# graphics background.

I have been going through the following posts and it makes me feel that Unity might not have the capability to do 2D games that would feature things like the oil flow in the game "feed me oil". It seems to lack the features to create and apply dynamic textures.

http://answers.unity3d.com/questions/53170/using-drawing-package-like-systemdrawing.html http://answers.unity3d.com/questions/201431/how-to-make-a-realtime-3d-eulerian-fluid-simulatio.html http://answers.unity3d.com/questions/31104/how-do-i-draw-directly-and-quickly-into-the-render.html

What i gather from above posts and from my googling around is that there is no graphics library to dynamically create a texture in memory that could change every frame. The only available option of SetPixel is supposedly very slow to be even considered.

Please correct me if my understanding is incorrect.

1) If supose you were to implement an oil/fluid flow and assuming you have the algorithm for it, how would you go about rendering it in Unity ?

2) Is there a way to compose an image texture dynamically in code and apply it to a plane/quad without performance penalties ?