Valve appended a tiny, incendiary surprise bomb to the end of the Meet The Pyro video : they've announced a free tool called Source Filmmaker. It's going into closed beta ( apply here ) and currently only supports Team Fortress 2. But beyond that, it seems like a suite that will equip machinima creators to truly tinker with what they produce; Valve says it'll let you "repurpose the video game world into a virtual movie studio." Among the tool's capabilities, you can make adjustments mid-playback, hand-animation of models, GPU-powered facial animation, and, amazingly—using Team Fortress 2 multiplayer to capture editable shots.
Valve created a video walkthrough of Filmmaker that also provides a behind-the-scenes glance at the creation of some of their TF2 shorts. Come watch within.