I attended a Studio Workshop today at Siggraph called UE4 Virtual Movie Production and Sequencer. Sequencer is pretty impressive and now you have everything you need to make a movie inside Unreal. Basically, Sequencer lets you record your gameplay animation and edit the "footage" on a timeline. You can even do multiple takes and add audio! The game engine has assets that resemble real world filmmaking equipment (camera rigs and tracks).
One limitation is that the workflow is not super intuitive. Actually, the workflow is probably intuitive to an Unreal Engine pro, which I am not. At one point, I stopped trying to follow along with the instructor and just started watching him. The other limitation, which is probably a limitation that anyone trying to make a movie inside a game engine is going to come across, is that you are limited to the Unreal Engine "look". Maybe you can render movies generated by Unreal using other renderers? Of course, if you did that, then the virtual filmmaking process will no longer be a real time one.
