I was watching some music videos using World of Warcrafts ingame engine and I wondered what if a company made a full feature length movie using a games ingame engine. Have they ever done this?

Would anyone even be interested in watching it as the graphics would be inferior to a conventional 3D movie?

Gary's Mod is popular to use to make short films but would anyone want to watch 90 mins of a Gary's mod production.

Personally I like ingame cutscenes but they rarely last more than a few minutes and I still feel I want to be in control. What does everyone else think?

People would be interested in watching a feature-length production because conventional 3D movies have too many industry limitations placed upon them. It's the same reason independent films have the capability to be... what, more "interesting"? More "whatever the creator wants it to be?"

Personally I would find such a thing as compelling as any indie game. Obviously if it's garbage it's garbage, but it has the capability to be anything it wants with very little to no limitations placed upon it. That is exciting.

Stolen Life (2007)

Wow, thank you.

Look up Anachronox.
Then look up Red vs. Blue.