Anyone in this thread who hasn't should definattly read J. Gregory Keyes The WaterBorn He does a fantastic job of presenting Shamanism with small gods, and Monotheism in the same world, both working under the same metaphysical laws.
I havn't actually ran a campaign with it (never enough time to do all the cool campaign ideas) but i've considered doing a small gods thing. not with everything being a god, just some things.
Every rock, and tree and creature having a lifeforce and spirit of course, but not every tree is a god. The old oak in the center of town, there before the town was built however, she's different, she's old, she's wise, she speaks to people, watches over the town, sometimes she walks in human form. The difference comes from her age, the things she's see, and just the spirit of all that's happened around her has added to her.
To the person who asked how are these gods, at least in my interpretation your looking from the wrong angle. The catcus isn't a god becuase it's a cactus, the god is a cactus becuase that's the form it holds.
They are just like any other gods, in any other world, just on a smaller range and scale, and they are actually tied to a physical form.