The Blender Institute is currently on a bit of a mission to push the limits of what the software is capable of and is using the open source nature of the software as a model for these test films.
The latest release is the 12-minute short, Tears of Steel which seamlessly blends live-action with Blender-animated VFX. The notion that VFX and animation are relatives is not a new one, but Tears of Steel only blurs the line between them even further.
Enjoy!