Yes, destructible meshes are indeed a good idea for that sort of thing.
Basically you create a destructible mesh from one of your static meshes (e.g. your rock), spawn it and apply a radius damage with some impulse. The damage breaks the mesh and the impulse lets the little parts fly around
Just have a look at these tutorials:
.unrealengine.com/latest/INT/Resources/ContentExamples/Destructables/ and
