So, you can see this demo in action at http://www.geomerics.com/enlighten-media-develop06.htm - some videos.
http://www.geomerics.com/enlighten-sdk.htm - base description.
Epic games is a partner ("Enlighten will also be available for licensing for use in Unreal Engine 3") - so, maybe Source will fall after that :D. Maybe yhis technology will be used in source - anyway, looks perspective