Tom Lowe
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Actually if I remember correctly Gollum's expressions were almost entirely hand animated from reference video since facial capture wasn't up to the task yet.
Weta didn't start performance capture in earnest until King Kong. Also Cameron didn't invent performance capture or the term. They did do some cool new innovative things with it but the tech was already being employed pretty broadly. The first serious film to use performance capture is unfortunately probably Polar Express which was released a year before Avatar production began and popularized the term "Performance Capture" in the media.
Unless you're referring to the rendering technology in which case, yes they were both I believe mostly rendered in Pixar's Renderman.
Gavin, my point was that Gollum was really the first photo-real, non-human character to work well. You can mention Yoda and some other from previous films, but Gollum was the first to really do it right. James Cameron mentioned Gollum specifically in his interviews about knowing when the time was right for Avatar. You are correct about facial capture and Kong.
Anyway, my point is... this type of large-scale performance or motion-capture technology was not possible until WETA and Cameron did it. I'm talking about an entire film made up of 90% CGI-based, performance-capture characters. This was not possible when Jackson did LOTR. Now it is. So why have human actors playing Hobbits?
To me, fantasy genres should not have guys in rubber suits and masks. If the technology is there to heighten the magic and adventure and otherworldliness, use it. The Hobbit is a damn near perfect opportunity for this new technology.
I think a lot of people are missing the biggest part of what Cameron did in Avatar. It's not the 3D or the CGI.... it's the ability to make non-human characters photo-real and carry an entire movie. That's the real game changer. And no one seems to have picked up on it yet. At least, they don't seem to be making movies using that technology. They seem to have been distracted by the 3D... when that technology is chicken scratch compared to the performance-capture CGI characters.