This is not a rendering, it's just some texture scaling and layering...
It's fairly well done, but it's made of photographs, not 3D. I'd expect a site-full of geeks to be able to tell... You can easily spot that the distortion of the hair and stuff involves scaling of textures, not rendering.
How was the rendering done? I guess that some facial features are made from blended texture mapped polygons (the hair and the neck). The face and the eyes might require some other tricks.
What amazes me is how efficient the rendering is. It uses flash for rendering and is running fast on my netbook. If this could be taken into 3D games, it would make the game characters much more realistic/scary.
Well I think it's over 4 years old. At the time I read something about it and I think they were stacking 2D images fading and scaling them. As I remember well there was no 3D involved.
Why this can't be used in games? First, you can't change the viewing angle because it's not full 3D. Secondly, the lighting is static (from photograph setting) and thus the shading remains static all the time. In addition, facial animations will be limited.
I have to say though that bad looking characters in games are usually fault of the artist, not the underlying technology.
Reminds me of that one Microsoft search site that was interactive with some lady at a desk, used to launch Bing or something. From 2008 I believe. it was http://ms (name of chick).com I remember.