I'm guessing you've never heard of machinima. It's using 3D computer graphics engines to make movies. I have long been a fan of Red vs. Blue, even before I had ever seen the game Halo or knew that they were acting using computer game characters.
But yesterday, in my rummaging through stuff at Revver.com, I noticed that a comedy team in New York has taken machinima to the next level: live performance!
Check out this movie, and if you like it, view the other three parts.
revver(43441)
Part 2 Part 3 - Starring the guy that wrote the Code Monkey song. Part 4
Pretty amazing. Obviously, the animation is still a little rough and the mouth and face tracking can be improved upon, but I have no doubt that you will be seeing a lot more of this in the future as rendering engines and the tracking technology continues to improve.