I had hoped they would pay a psychologist silly money to help perfect facial animations (if Jade Empire can pay someone to make up a language then.....) but this is a good stop gap measure I guess. Not to belittle them in the slightest (this is some awesome tech) but generation is surely a better goal than filming. Maybe they could try something similar to the PS1 era RPGs- voice the main plot but some of the side stories go "text only" but with muscle vectors and the like (I know this leads to a specific form of criticism).
Also I am sure it will be better for the final game but I hope they have some good clipping prevention- if you are going for immersion as they appear to be having a neck float through a shirt collar is not so nice.
I will have to put from my mind that poker game from early in the DS lifetime that did a similar thing with facial expressions.......