Hi Ross,
As we exchanged some email about a year ago, I teach a Machinima class here at the University of Utah and have been doing so since 2007. We have struggled using Source as you have. BTW - one thing that I would add to your list of features is real time editing. We've tested with several game engines and the modern ones allow you to work on set/level design and then push a button and immediately drop into the level to look around. This reduces the save, build, fire up hl2 time significantly. Anyway, we have investigated a lot of different options, but have yet to find one that works. We have mostly experimented with game engines. We have tried:
* Gamebryo - with zero assets, we decided to try and import models from Source. We were able to get their models and animations in. This was great as it allowed you to scale the assets (including characters). But we never got facial and lip sync to work (the student that I had working on it ran out of time).
* Unreal UDK - again no assets. I had two student teams build games with UDK. The games were great, but using UDK was a royal PITB from the computer science side of things because the scripting language is not terribly well documented and neither are the library calls. We didn't really get into the whole machinima thing. I may keep investigating this some.
* Crysis - I had a team of five students attempt to build machinima with Crysis this past semester. They got a movie made, had lip syncing in the equivalent of face poser, but could never get that working in game. Also, we tried to use the Crysis 2 assets and had difficulty getting a wide range of characters. One thing it does have is the ability to create external scenes with mountains and vegetation that not only are beautiful, but fast to create. One encouraging piece of work was to use the Daz3D genesis characters (if you haven't seen this, search youtube for daz3d genesis and you will see the coolest tool which allows you to take a human character and morph it into pretty much anything you like). We have been able to get the daz characters into crysis and get their animations working. The lip sync and facial stuff is being experimented with. daz also has tools that allow you to use the kinect to do mocap. Again, I'm encouraged, but nothing yet is up to our standard of making machinima like we can do in Source. Note - I also have looked into unity 3D which has nice tools for doing Daz to Unity. However, I have yet to find a solution to the lip syncing. I believe I read that the methods that Daz and unity use are incompatible.
Bottom line - we have yet to find anything that gives the kind of control that you get from source and has the huge set of assets. We keep looking.
Bob Kessler
Entertainment Arts and Engineering
p.s. I forgot to mention that if you haven't looked into Cinematic Mod for HL2, you should. He has created some absolutely amazing looking characters.