Ok, so the question last night about vector rotoscoping got me curious about what non-commercial solutions are out here. Here is what seems the most competent commerical solution plus some examples of the "Waking Life" effect.
For background, here is a tutorial on bitmap to vector conversion within Flash:
Trace Bitmap Also see the section on optimizing the trace bitmap function: Optimization
This method works well for single bitmaps but for bitmap sequences, the problem is that there is no optimization to reduce duplicate data between frames. This results in much larger files with more complex vector data.
Other vector conversion options are available in Adobe Illustrator and Streamline, and Macromedia Freehand. None of these tool offer sequence optimization however.
So far I haven't found an open source (or easy) solution. It may be possible to cobble something together using several open source packages. Here are some links:
http://www.openswf.org/
http://ming.sourceforge.net/
http://autotrace.sourceforge.net/index.html