This is actually discussed on the live-action animated film Wikipedia page.

Since the late 1990s, some films have included large amounts of photorealistic computer animation alongside live-action filmmaking, such as the Star Wars prequels, The Lord of the Rings trilogy and the Avatar franchise. These films are generally not considered animated due to the realism of the animation and the use of motion-capture performances, which are extensively based on live-action performances by implementing actors' movements and facial expressions into their characters. Roger Ebert said that "in my mind, it isn't animation, unless it looks like animation."

Related note: I'm quite nostalgic for the mid-20th century live-action animation trend (even more so than the late-20th century puppet trend). If the characters are going to look fake regardless, the animated ones are way more expressive and, well, animated.