Joel,
I think you have it wrong. Physics has not ignored Octonions, (almost all) physicists have. There is a difference.
You know of my website and have emailed me in te past. I think perhaps you have not looked at what I have presented, else you would not conclude that physics has ignored Octonions. Instead, you would conclude that Octonions sing the song of our physical world. The beautiful structure of the algebra gives us many clues as to how the physical world MUST be, if only we would listen to the melody.
But you must have faith in the structure to buy into the process, and you must not try to force other forms of faith into the discussion as a prerequisite for acceptance. This is where physicists fail Octonions, not where Octonions fail physicists.
Take non-associativity for instance. If it is your religion that physical reality must be associative, then you surely will have an issue with Octonions. But where does this notion come from, but outside the structure and the application of Octonions? It may have relavance within the confines of the non-octonion formalism, but it is a big leap of faith to believe the concept of associativity is a universal truth of physical reality and ANY mathematical method by which we model and try to better understand reality must abide by it.
Mathematics is robust, and the true value of any particular choice for application in physics is what the choice brings to the party. Octonions tell you up front, "hey you, multiplication order matters, get a clue!" Then it tells you, "hey you, its me again. I have more than one way of being defined. And those people saying 480 ways, forget about it."
480 does not come from the algebra itself, it comes from abstractionists whose dogma is defined outside the scope of Octonion Algebra, and whose faith is their religion is universally true and applicable to all. But I digress.
The structure of the algebra of Octonions tells us to look at the product histories of each product term we come up with when we multiply a full form differential operator on its target, be it an 8D potential function or previously differentiated form on it. When we sort the product terms out as to whether and how they may change if the definition of multiplication changes between rules that continue to yield an alternative composition algebras, we find recognizable differentiated forms from Electrodynamics for what we know are forces, expressions for work and energy density, energy density flux as a subset of all product terms that are exactly the same for ANY of the possible definitions of Octonion Algebra.
Physics ignoring the Octonions? I think not.
Physicists ignoring Octonions. I hardly have to itemize, the case is made.
What confounds me to this very day is how my own work has not been commented on by the likes of Drs Dray and Manogue, and especially John Baez. I sent all of them papers outlining my work before my website was up, and have pointed Baez in the direction of the website in his n-category blog. Can't imagine he has not looked at it. To have his long standing and keen interest in Octonions then being given the Octonion form for the structure of the field equations from potentials through the conservation of energy and momentum accurately describing known and trusted Electrodynamics and not illiciting a single comment, not even privately, is odd.
I value their opinions, wish I had them.
Rick Lockyer