Thanks for the explanation, guys. Quite a colourful term - one I hope I never have to use!
FYI Ovr, I think the "dropping" of the engine is more figurative than literal. By my understanding, to calve an engine isn't to physically remove it from the car, but rather to simply have it die on you.
I've heard the expression used somewhat like this: "I had her wound up to 7,500 rpm, then BAM, the engine just calved on me."