Hello.
The work below is not mine. It's from user 'Nix' of the Polycount forums. Click on the images to zoom.

He used Blender to model and 3D-paint a character from the game "Bastion." There's no doubt that he used a graphics tablet rather than a mouse for this, to achieve that smooth nuance of tone and texture.
This visual style is worth sharing for reference. In any 3D view, the 3D object looks like a painting. It would look really nice if animated.

Original thread: http://www.polycount.com/forum/showthread.php?t=93318

Further reading:
• Blender documentation on texture painting: http://wiki.blender.org/index.php/Doc:2.4/Manual/Textures/Painting
• I imagine that this is what Disney's mysterious "Deep Canvas" technology, used on films like Tarzan, is based on: 3D painting that's projected onto models as texture maps. This way the background artists can paint onto 3D models that are used for special animated sequences and composited with 2D animation without breaking the illusion.

It would look really nice if animated.

I don't think so. It is a still (nevertheless, it looks really fantastic), all the lighting and shadow information are painted onto the texture, therefor it only looks like this as long as it is not represented in a dynamic way (either animated or included in a dynamic scene).

Not sure the purpose of the thread? Share what you found? At most this seems like a very well done hand painted model. Where does the Disney part come in? Ashaman makes another good point. The major downfall with handpainted is that you are baking the shadows into the actual design. Unless you specifically hand paint it to have no extra shadowing ( which this one does not ) you will get some serious lighting issues depending on the scene. Handpainted only works if you have a very static lighting method as well as a static scene. You can use my game as a reference for the difficulties associated with hand painted and dynamic lighting changes. (cause I hand paint!)

Not sure the purpose of the thread?

To discuss and curate a particular style and technology employed in visual arts for games.
Thank you for your contribution.

It is a still (nevertheless, it looks really fantastic), all the lighting and shadow information are painted onto the texture, therefor it only looks like this as long as it is not represented in a dynamic way (either animated or included in a dynamic scene).

That's a good point.
If I were given this style to implement in a game with animated models, I would only paint-in the shadows for areas of the models with high ambient occlusion.
For that "Bastion" model, these parts would be the area of the forehead that meets the hair; the areas of the arms that are covered by the armour plates; the parts of the boots right below the metal rings.
These are parts that you can get away with painting shadow, as they give the model more depth and are naturally darker even within a dynamic lighting model.

Additionally, one could implement a simple per-pixel diffuse shading (the first technique exposed here), and also hard shadows with the stencil buffer but without self-shadowing (so that the characters only cast shadows on the environment).
This would look great.

I don't think this will work in a game. In a typical 3D game this model would not look like a painting but like 3D model with painted clothes. There's a huge difference between those two (the second thing isn't necessarily bad though). You could work with camera angles and lighting to lower the effect but it would in my opinion still be far away from a painting-effect. The closest thing that I know that came to a (well, not painted but) drawn look in a 3D environment is cel shading but even here some people argue that it doesn't cut it when animated.

I guess the best way to deliver a painting-look is still 2D sprites. Maybe that's why they don't die.