It's not block-oriented. Image components are meshes, and they're filled with textures. Between frames, the meshes change position and shape, and the textures dissolve. It's a full morph.[1][2]

This got to the demo stage, and there were a plug-in and an SDK around 2008. The playback side worked fine, but the compression side was really slow at the time.

[1] https://www.youtube.com/watch?v=RHHfNZFuM0g [2] https://www.youtube.com/watch?v=VBfss0AaNaU