Check out what I've been up to in Blender! This is mostly an experiment in multiple things to see if I could do them. The first is animating a 2D face on a 3D character- which is actually quite fun and easy. This indeed can be done, the movie is simply drawn on top of the UV map (I did that part in Flash), and each frame in the 2D movie is automatically synchronized with that in the 3D movie. I like the effect, it keeps her rather cartoony- though a character would have to be designed around this aspect. The character's face doesn't necessarily need to be flat either, a nose could be modeled, and the eyes and mouth projected around that, no problem. Additionally, 3D modeled bits of the character can still be animated as well, as shown with the simple test rigging. (Even though the character's skin moves and stretches, the UV map stays in the same place.)

While her main body squashes and stretches, her ears wiggle and her tail curls. The body is a simple distortion, ears and tail are bone rigging and weighting.

I also created some grass using particle effects. Nothing too fancy there- yet. Based on some old game concept art http://avidlebon.deviantart.com/art/ABS-Game-Char-Sheet-Cat-48207201