“How about another Dirty Harry movie where Clint looks the way he looked in 1975?” Cameron suggests. “Or a James Bond movie where Sean Connery looks the way he did in Doctor No? How cool would that be?”

“If Tom Cruise left instructions for his estate that it was okay to use his likeness in Mission Impossible movies for the next 500 years, I would say that would be fine,” says Cameron. Less fine, at least to Cameron, is bringing long dead stars back to life. “You could put Marilyn Monroe and Humphrey Bogart in a movie together, but it wouldn’t be them. You’d have to have somebody play them. And that’s where I think you cross an ethical boundary…”

The word "synthespian" was coined by Jeff Kleiser. Kleiser and Diana Walczak created the first digital actor for their 1988 short film Nestor Sextone for President.

A year later, the pair created a short film Don't Touch Me, featuring a singing synthespian named Dozo.

Intrigued by the potential of motion capture to link natural human motion to our synthetic characters, we created Don't Touch Me, a music video piece that premiered at SIGGRAPH 1990 in which singer/songwriter Perla Batalla was optically motion captured (by Motion Analysis in Santa Rosa, CA) to drive a singing synthespian called Dozo. By this time, we had suitable flexing software for simple joints like elbows and knees, but the multi-axis requirements for the shoulder joint meant a solution was still several months of development away.

Facial animation was again created by linking digitized sculptures of various facial expressions and this technique yielded superior results to any of the software solutions of the time that sought to model the musculature of the face. Software solutions would require many years of development before they would overcome the quality and believability of the sculpture-based technique, which allowed for the preservation of facial volume and the illusion of the preservation of facial muscle integrity during motion.
(From Synthespianism by Jeff Kleiser)

SF writer William Gibson included the idea of synthespians in his 1996 novel Idoru:

"What did Blackwell mean, last night, about Rez wanting to marry a Japanese girl who isn't real?" "Idoru," Yamazaki said... "'Idol-singer.' She is Rei Toei. She is a personality-construct, a congeries of software agents, the creation of information-designers. She is akin to what I believe they call a 'synthespian,' in Hollywood."
(Read more about Gibson's synthespian)

Update 21-Jan-2010: Jeff Kleiser happened to see this article, and wrote in with exactly what I was looking for - a video showing Nestor Sextone for President. This is a compilation video; see the portion beginning at 2:00:

"Max Headroom was written and directed by Rocky Morton and Annabel Jankel (now of MJZ) and they used Matt Frewer in makeup to represent a CG character. We were poking fun at them in Nestor Sextone for President: Nestor is running for president of the synthetic actors guild, and promising that humans in makeup will no longer take work away from synthetic actors." - Jeff Kleiser

End update.