On The History Channel's Decisive Battles, Gamed
Thanks to GameSpot for its interview with the creators of the 'Decisive Battles' TV show, as they discuss the "new History Channel series [that] re-creates some of the most pivotal battles of the ancient world, including Cannae, Thermopylae, and Marathon.. [using the engine from] upcoming real-time strategy game Rome: Total War." We've previously discussed this endeavor, but the interview explains specifics ("We'd... build the battles in the same way as we do for all the 'historical battles' in the game - but then use a few cheat codes when we play them out in order to be able to choreograph the exact movements of the troops for that particular battle"), as well as plans ("Future episodes will include the battles of Thermopylae, Adrianople, Chalon, Carrhae, Pharsalus, Spartacus and the Slave Revolt of 73 BC, Cynoscephalae, Kadesh, Teutoberg Forest, and Watling Street.")
It hasn't hit Hollywood yet, but there's a very active scene around "Machinima". Slashdot has posted stories about machinima before, as well, such as the Anachronox movie.
Stargate SG-1 just had an episode last Friday ("Avatar") using some in-game footage from an upcoming SG-1 game. It wasn't a particularly effective use of the footage, though - it seemed more like it was wedged in there by marketing than by the writers.
Molyneux and friends are also working on a game called "The Movies" which could ostensibly be used to produce amateur renditions of movies or shows.
And, of course, who can forget the use of the Halo engine in Red vs Blue, the second season of which was just released on a hilarious DVD.