Evidentally it is somewhat easy for young cats to take a jump or fall and the leg bone breaks through the hip socket because the bones are not fully calcified. FHO surgery is one in which they take the head off of the femur bone and make a false joint with what is left. There is no direct contact between the femur bone and the hip socket, everything is held loosely in place by muscles, tendons, etc. Since cats are relatively lightweight they do pretty well with it from what I understand. I think my vet said that Havoc's femur was broken, not the hip so I assume the head may have broken off of the leg. She did say it was ground down to pretty much nothing so I imagine it was just kinda rolling around in there as he walked. I'll ask to see Xrays if they're not too busy when I get his sutures out.

I can't seem to find the info on the actual surgery but I did find this "ask-a-vet" type site where someone inquired about their cat. 2nd question down.
http://www.vetinfo4cats.com/catortho.html