Large companies have done things similar to this when I think about it. Referring back to Avatar is a good example of a film that merges CGI with real-time footage.
Time based works.
If I had the ability to do so I would love to create a 1st person perspective short time based piece of work showing myself (or a character) walking between the real and virtual world. For example film a real house, then walking out of the front door into a virtual war then hiding in a bunker only to get inside and find out the bunker is my room, run back out of my room and be facing a virtual dragon! But yeah... thats the general idea.