To promote the latest installment of Illegal Danish, their popular World of Warcraft machinima series, D.W. Hackleman and his brother Clint came up with a clever conceit: They fully recreated the trailer of the hotly anticipated game Starcraft II with elements of Warcraft. Now instead of a cigar-chomping space Marine donning an armored helmet, the Hacklemans’ version ends with a spunky purple-haired gnome named Dirti G, ready to rock.

Converting Warcraft’s medieval fantasy trappings into Starcraft’s military sci-fi milieu was a painstaking task that Clint estimates took the brothers about 700 hours to complete. At the end, however, they had a machinima appealing to both Warcraft and Starcraft fans. (Both games, not coincidentally, are from Blizzard Entertainment.) That’s likely to attract more viewers to their Danish series, which according to Clint, has already been viewed over 10 million times. (He says the Starcraft II parody, which went online July 4, has already attracted 50,000 views.)

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Thanks to countless videos of the Iranian uprising now being streamed on its system, YouTube may suddenly seem to be at the center of international news. But from the company’s perspective, YouTube spokesman Scott Rubin insisted to me in a phone interview this afternoon, it’s more or less just another week at the office. The sudden rush of videos from Iran represent “the core of our mission,” he said. “It’s exciting to see YouTube being used this way, as it’s intended.” He also disputed a New York Times report from yesterday, which suggested the company had “relaxed its usual restrictions” against videos depicting violent imagery so that Iranians could freely upload footage that depicted the often brutal repression now going on in the streets of Tehran and other Persian cities.

In actuality, Rubin said, YouTube has always allowed exceptions for some violent videos that also contained educational, documentary or scientific value. In light of the uprising, he said, “We just pay special attention to make sure…everybody is understanding the policy.” To do that, the company reviews videos flagged by users as objectionable, taking in the whole context, including their titles, tags, and descriptions, along with the video themselves. From that perspective, he offered by way of example, raw cell phone footage depicting protesters running from police would probably be acceptable, but if it was mashed up to include gory close-ups in which “the intent was to shock or disgust,” it would come down. As far as the ideological content of the videos, Rubin made a point of saying, “We are completely agnostic on the politics of this.”

Rubin told me he didn’t know of variation in the number of videos that YouTube users have flagged as objectionable since the popular uprising and the government backlash began. Nor was he sure how many Iran-related videos have been uploaded since last week’s election. However, he did note that the service has dropped to 10 percent of its normal traffic in Iran itself. “We’re assuming we’re blocked” by the Iranian government, he said, though no official from the country has yet contacted the company. Then again, the Chinese government has been blocking YouTube since March, he noted, and no official from the People’s Republic has notified the service, either. Dealing with government censorship is just part of YouTube’s regular workload.

Team Fortress 2 has already been on the market for 18 months, but the multiplayer shooter from Valve Software didn’t reach the peak of its popularity until last weekend — thanks in part to this month’s release of Meet the Spy, the latest in a series of machinima shorts Valve produces to introduce the game’s characters. Up until last week, Valve’s director of business development, Jason Holtman, told me in a conference call, TF2 was hitting maximum concurrency numbers of 32,000 players; over Memorial Day weekend, however, that more than doubled to 68,000. (The single best sales day was also last weekend.)

Like the game itself, Valve’s video series is a clever reworking of traditional first-person shooter conventions, eschewing realistic violence and macho fantasy for cartoonish graphics and ironic wit. (In Meet the Sniper, TF2’s ruthless Aussie marksman gets flustered by his disapproving parents.) Meet the Spy is by far the most ambitious installment, depicting a trio of befuddled squaddies who try to locate an enemy agent in their midst, only to be undone by comic mishap and a surprisingly romantic plot twist.

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To launch his SXSW panel, “Comedy on Television and the Web,” moderator Ricky Van Veen of CollegeHumor.com opened with a provocative but arguable point: Unlike previous technologies, humor and not porn is driving the adoption of online video.

What followed was a smart and (yes) funny conversation between leaders in web-based comedy and a couple luminaries in televised humor pondering how large web comedy can become compared with TV, and how the two mediums will influence each other. From the online world were panelists Van Veen, Keith Richman of Break Media, and Avner Ronen of Boxee;  Meredith Scardino, staff writer for The Colbert Report, and B.J. Novak, a star and writer for the U.S. version of The Office represented for old teevee. Here are some of my other favorite highlights, arranged as a series of questions (sometimes posed by the audience or panel, and sometimes by me):

Why are Hollywood stars afraid of Web video?

Van Veen notes that besides the occasional exception like Will Ferrell, most Hollywood stars are skittish about web video. Novak (left) speculates that they’re uncomfortable because it doesn’t have much connection with the film industry’s development infrastructure (the personal connections, the talent agencies, etc.) that they’re familiar with. Richman said he believes stars are afraid because the web is a democratic environment, where their efforts can be noticeably eclipsed by the latest grassroots breakout. Read more of this story

Though Bruce Branit completed World Builder — a poignant and visually dazzling short movie about a man who literally creates a new reality for the woman he loves — in 2007, it’s likely that far more people have seen it this March than in the last two years combined, thanks to the viral power of Internet distribution.

World Builder from Bruce Branit on Vimeo

In World Builder, a beautiful European town square seems to materialize from thin air and the builder’s glowing user interface; visually it compares favorably to scenes from The Matrix and Minority Report. But like the $400 Escape from City 17, it’s another example of what’s possible with low budgets and a high degree of inventiveness. In an email interview, Branit estimated that he spent just a little more than $2,000 of his own money for the stage, the equipment, and the camera. His brother, a cinematographer, called in favors for the live action elements, which were shot in a single day. (The cast and crew worked for free.) Branit finished the rest in the Lightwave 3-D graphics platform, working on it in between paying gigs over a couple years.

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If you’re an avid YouTube viewer, you’ve probably noticed the growing number of videos on the site that contain clickable links within the display screen. That’s the result of Video Annotations, a feature introduced last June that allows other clips to be embedded into videos. Lately it’s been increasingly used to string together several (or even several dozen) individual videos to create interactive video series. Many resemble a 21st-century version of those old “choose your own adventure” kids books or the original, laser disc-driven Dragon’s Lair, and suggest new ways to package future video content. Here’s a sampling to give you a sense of what’s possible in this evolving sub-genre — or at the very least, something to watch during your next lunch break.

Bboy Joker: Created by Canadian animator Patrick Boivin, who also made the YouTube Street Fighter videos we covered last month (which remains my favorite interactive series.) His latest is a stop-motion animated breakdance competition between The Joker and Batman, using highly articulated action figures based on The Dark Knight. You choose one of the characters, then try to mirror your competitors’ moves by memorizing their sequence and choosing the correct one from a quickly-flashing multiple choice menu at the top of the video. Watching Boivin’s impressive and complex animation sequences are just as entertaining as the interactive feature, if not more so.

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Viewed more than 1.5 million times since its YouTube debut last Thursday, Escape from City 17 is one of those rare viral videos that seems destined to launch a breakout success. In the live action indie short, a pair of argumentative rebel soldiers flee from a futuristic, totalitarian city about to blow, beset on all sides by stormtroopers, gunships, and general confusion. It’s set within the world of the best-selling video game Half-Life 2, which partly explains its popularity, but even non-gamers are likely to be impressed by its rollicking action and bravura special effects. Even more so when they take a look at the movie’s production cost, listed in its YouTube description box as: “[F]rom beginning to end on a budget of $500.” That would be 500 Canadian dollars — roughly $315 $400 stateside.

But is it really possible that a video about as polished as anything you’d see in a Sci-Fi Channel feature could be made so cheaply? And what did its creators, Toronto-based filmmakers David and Ian Purchase (known professionally as the Purchase Brothers), plan as a follow-up? To find out that and more, I got in touch with the brothers, who unsurprisingly, say they’ve been swamped by attention since City 17 went live. Read more of this story