
I used exactly that technique to do this film. Couple of colour ranges and a difference matte, mainly for the edges. And some roto-matting for the hoover pipe. And lots of garbage mattes thrown in for good measure
( ,
Sun 21 Nov 2004, 23:35,
archived)

about blurring the backgound of what's behind the moving footage, which simultaneously gives lightwrap AND sorts out the problem with the blur. I suppose you'd make it by making an inverse matte of a copied layer of your background footage, heavily blur it and put it over the top of your foreground plate...
( ,
Sun 21 Nov 2004, 23:45,
archived)